Correlation Between Vanguard Total and CbdMD

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

Diversification Opportunities for Vanguard Total and CbdMD

0.81

Correlation Coefficient

Vanguard Total  CbdMD

Very poor diversification

The 3 months correlation between Vanguard and CbdMD is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and cbdMD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on cbdMD Inc 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 CbdMD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of cbdMD Inc has no effect on the direction of Vanguard Total i.e., Vanguard Total and CbdMD go up and down completely randomly.

Pair Corralation between Vanguard Total and CbdMD

Considering the 90-day investment horizon Vanguard Total is expected to generate 3.8 times less return on investment than CbdMD. But when comparing it to its historical volatility, Vanguard Total Stock is 6.76 times less risky than CbdMD. It trades about 0.22 of its potential returns per unit of risk. cbdMD Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  62.00  in cbdMD Inc on September 2, 2024 and sell it today you would earn a total of  18.00  from holding cbdMD Inc or generate 29.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	82.81%
Values	Daily Returns

Vanguard Total Stock  vs.  cbdMD Inc

Vanguard Total Stock

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Vanguard Total may actually be approaching a critical reversion point that can send shares even higher in January 2025.

cbdMD Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in cbdMD Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, CbdMD sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard Total and CbdMD

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

The idea behind Vanguard Total Stock and cbdMD Inc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..