Correlation Between Vanguard Funds and Biogen

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

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

Diversification Opportunities for Vanguard Funds and Biogen

-0.86

Correlation Coefficient

Vanguard Funds  Biogen

Pay attention - limited upside

The 3 months correlation between Vanguard and Biogen is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Funds Public and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen Inc and Vanguard Funds 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 Funds Public are associated (or correlated) with Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of Vanguard Funds i.e., Vanguard Funds and Biogen go up and down completely randomly.

Pair Corralation between Vanguard Funds and Biogen

Assuming the 90 days trading horizon Vanguard Funds Public is expected to generate 0.51 times more return on investment than Biogen. However, Vanguard Funds Public is 1.98 times less risky than Biogen. It trades about 0.24 of its potential returns per unit of risk. Biogen Inc is currently generating about -0.16 per unit of risk. If you would invest  9,622  in Vanguard Funds Public on September 13, 2024 and sell it today you would earn a total of  1,304  from holding Vanguard Funds Public or generate 13.55% return on investment over 90 days.

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

Vanguard Funds Public  vs.  Biogen Inc

Vanguard Funds Public

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Funds Public are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Vanguard Funds reported solid returns over the last few months and may actually be approaching a breakup point.

Biogen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biogen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Vanguard Funds and Biogen

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

The idea behind Vanguard Funds Public and Biogen 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.