Correlation Between Vanguard Total and ETF Securities

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

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

Diversification Opportunities for Vanguard Total and ETF Securities

0.0

Correlation Coefficient

Vanguard Total  ETF Securities

Pay attention - limited upside

The 3 months correlation between Vanguard and ETF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and ETF Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Securities and Vanguard Total 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 Total Stock are associated (or correlated) with ETF Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Securities has no effect on the direction of Vanguard Total i.e., Vanguard Total and ETF Securities go up and down completely randomly.

Pair Corralation between Vanguard Total and ETF Securities

If you would invest  27,968  in Vanguard Total Stock on October 1, 2024 and sell it today you would earn a total of  1,439  from holding Vanguard Total Stock or generate 5.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Vanguard Total Stock  vs.  ETF Securities

Vanguard Total Stock

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Vanguard Total is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

ETF Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ETF Securities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, ETF Securities is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vanguard Total and ETF Securities

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

The idea behind Vanguard Total Stock and ETF Securities 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.

Check out your portfolio center.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.