Correlation Between Vanguard Managed and Vanguard Strategic

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

By analyzing existing cross correlation between Vanguard Managed Payout and Vanguard Strategic Small Cap, you can compare the effects of market volatilities on Vanguard Managed and Vanguard Strategic 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 Managed with a short position of Vanguard Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Managed and Vanguard Strategic.

Diversification Opportunities for Vanguard Managed and Vanguard Strategic

-0.31

Correlation Coefficient

Vanguard Managed  Vanguard Strategic

Very good diversification

The 3 months correlation between VANGUARD and Vanguard is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Managed Payout and Vanguard Strategic Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Strategic and Vanguard Managed 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 Managed Payout are associated (or correlated) with Vanguard Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Strategic has no effect on the direction of Vanguard Managed i.e., Vanguard Managed and Vanguard Strategic go up and down completely randomly.

Pair Corralation between Vanguard Managed and Vanguard Strategic

If you would invest  4,108  in Vanguard Strategic Small Cap on September 3, 2024 and sell it today you would earn a total of  578.00  from holding Vanguard Strategic Small Cap or generate 14.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Vanguard Managed Payout  vs.  Vanguard Strategic Small Cap

Vanguard Managed Payout

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Managed Payout has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Vanguard Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Strategic

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Strategic Small Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Vanguard Strategic showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard Managed and Vanguard Strategic

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

The idea behind Vanguard Managed Payout and Vanguard Strategic Small Cap 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.