Correlation Between Roundhill Magnificent and Vanguard Total

Can any of the company-specific risk be diversified away by investing in both Roundhill Magnificent and Vanguard Total 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 Roundhill Magnificent and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Roundhill Magnificent Seven and Vanguard Total International, you can compare the effects of market volatilities on Roundhill Magnificent and Vanguard Total 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 Roundhill Magnificent with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roundhill Magnificent and Vanguard Total.

Diversification Opportunities for Roundhill Magnificent and Vanguard Total

-0.32

Correlation Coefficient

Roundhill Magnificent  Vanguard Total

Very good diversification

The 3 months correlation between Roundhill and Vanguard is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Roundhill Magnificent Seven and Vanguard Total International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Inter and Roundhill Magnificent 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 Roundhill Magnificent Seven are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Inter has no effect on the direction of Roundhill Magnificent i.e., Roundhill Magnificent and Vanguard Total go up and down completely randomly.

Pair Corralation between Roundhill Magnificent and Vanguard Total

Given the investment horizon of 90 days Roundhill Magnificent Seven is expected to generate 1.77 times more return on investment than Vanguard Total. However, Roundhill Magnificent is 1.77 times more volatile than Vanguard Total International. It trades about 0.2 of its potential returns per unit of risk. Vanguard Total International is currently generating about -0.03 per unit of risk. If you would invest  4,315  in Roundhill Magnificent Seven on September 1, 2024 and sell it today you would earn a total of  860.00  from holding Roundhill Magnificent Seven or generate 19.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Roundhill Magnificent Seven  vs.  Vanguard Total International

Roundhill Magnificent

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Roundhill Magnificent Seven are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Roundhill Magnificent unveiled solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Total Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Total International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vanguard Total is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Roundhill Magnificent and Vanguard Total

The main advantage of trading using opposite Roundhill Magnificent and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roundhill Magnificent position performs unexpectedly, Vanguard Total 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 Total will offset losses from the drop in Vanguard Total's long position.

The idea behind Roundhill Magnificent Seven and Vanguard Total International 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.