Correlation Between Vanguard Consumer and IShares Genomics

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

By analyzing existing cross correlation between Vanguard Consumer Discretionary and iShares Genomics Immunology, you can compare the effects of market volatilities on Vanguard Consumer and IShares Genomics 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 Vanguard Consumer with a short position of IShares Genomics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Consumer and IShares Genomics.

Diversification Opportunities for Vanguard Consumer and IShares Genomics

-0.16

Correlation Coefficient

Vanguard Consumer  IShares Genomics

Good diversification

The 3 months correlation between Vanguard and IShares is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Consumer Discretionar and iShares Genomics Immunology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Genomics Imm and Vanguard Consumer 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 Vanguard Consumer Discretionary are associated (or correlated) with IShares Genomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Genomics Imm has no effect on the direction of Vanguard Consumer i.e., Vanguard Consumer and IShares Genomics go up and down completely randomly.

Pair Corralation between Vanguard Consumer and IShares Genomics

Considering the 90-day investment horizon Vanguard Consumer Discretionary is expected to generate 0.85 times more return on investment than IShares Genomics. However, Vanguard Consumer Discretionary is 1.17 times less risky than IShares Genomics. It trades about 0.29 of its potential returns per unit of risk. iShares Genomics Immunology is currently generating about 0.0 per unit of risk. If you would invest  32,462  in Vanguard Consumer Discretionary on September 12, 2024 and sell it today you would earn a total of  6,619  from holding Vanguard Consumer Discretionary or generate 20.39% return on investment over 90 days.

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

Vanguard Consumer Discretionar  vs.  iShares Genomics Immunology

Vanguard Consumer

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Consumer Discretionary are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental indicators, Vanguard Consumer reported solid returns over the last few months and may actually be approaching a breakup point.

iShares Genomics Imm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Genomics Immunology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IShares Genomics is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Consumer and IShares Genomics

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

The idea behind Vanguard Consumer Discretionary and iShares Genomics Immunology 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.