Correlation Between Vanguard Total and CHIX

Can any of the company-specific risk be diversified away by investing in both Vanguard Total and CHIX 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 CHIX 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 CHIX, you can compare the effects of market volatilities on Vanguard Total and CHIX 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 CHIX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and CHIX.

Diversification Opportunities for Vanguard Total and CHIX

-0.6

Correlation Coefficient

Vanguard Total  CHIX

Excellent diversification

The 3 months correlation between Vanguard and CHIX is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and CHIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIX 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 CHIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIX has no effect on the direction of Vanguard Total i.e., Vanguard Total and CHIX go up and down completely randomly.

Pair Corralation between Vanguard Total and CHIX

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	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Vanguard Total Stock  vs.  CHIX

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.

CHIX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHIX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, CHIX 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 Total and CHIX

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

The idea behind Vanguard Total Stock and CHIX 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.