Correlation Between Mast Global and Vanguard Industrials

Can any of the company-specific risk be diversified away by investing in both Mast Global and Vanguard Industrials at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Mast Global and Vanguard Industrials into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mast Global Battery and Vanguard Industrials Index, you can compare the effects of market volatilities on Mast Global and Vanguard Industrials and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Mast Global with a short position of Vanguard Industrials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mast Global and Vanguard Industrials.

Diversification Opportunities for Mast Global and Vanguard Industrials

0.33

Correlation Coefficient

Mast Global  Vanguard Industrials

Weak diversification

The 3 months correlation between Mast and Vanguard is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Mast Global Battery and Vanguard Industrials Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Industrials and Mast Global is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Mast Global Battery are associated (or correlated) with Vanguard Industrials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Industrials has no effect on the direction of Mast Global i.e., Mast Global and Vanguard Industrials go up and down completely randomly.

Pair Corralation between Mast Global and Vanguard Industrials

Allowing for the 90-day total investment horizon Mast Global Battery is expected to generate 1.72 times more return on investment than Vanguard Industrials. However, Mast Global is 1.72 times more volatile than Vanguard Industrials Index. It trades about 0.0 of its potential returns per unit of risk. Vanguard Industrials Index is currently generating about -0.16 per unit of risk. If you would invest  2,592  in Mast Global Battery on September 12, 2024 and sell it today you would lose (7.00) from holding Mast Global Battery or give up 0.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Mast Global Battery  vs.  Vanguard Industrials Index

Mast Global Battery

Risk-Adjusted Performance

7 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mast Global Battery are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Mast Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vanguard Industrials

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Industrials Index are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal forward indicators, Vanguard Industrials may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mast Global and Vanguard Industrials

The main advantage of trading using opposite Mast Global and Vanguard Industrials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mast Global position performs unexpectedly, Vanguard Industrials can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Vanguard Industrials will offset losses from the drop in Vanguard Industrials' long position.

The idea behind Mast Global Battery and Vanguard Industrials Index pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.