Correlation Between Vanguard Value and Guggenheim Large

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

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

Diversification Opportunities for Vanguard Value and Guggenheim Large

0.97

Correlation Coefficient

Vanguard Value  Guggenheim Large

Almost no diversification

The 3 months correlation between Vanguard and Guggenheim is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index and Guggenheim Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Large Cap and Vanguard Value 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 Value Index are associated (or correlated) with Guggenheim Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Large Cap has no effect on the direction of Vanguard Value i.e., Vanguard Value and Guggenheim Large go up and down completely randomly.

Pair Corralation between Vanguard Value and Guggenheim Large

Assuming the 90 days horizon Vanguard Value is expected to generate 1.8 times less return on investment than Guggenheim Large. In addition to that, Vanguard Value is 1.04 times more volatile than Guggenheim Large Cap. It trades about 0.08 of its total potential returns per unit of risk. Guggenheim Large Cap is currently generating about 0.16 per unit of volatility. If you would invest  4,714  in Guggenheim Large Cap on September 13, 2024 and sell it today you would earn a total of  281.00  from holding Guggenheim Large Cap or generate 5.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Vanguard Value Index  vs.  Guggenheim Large Cap

Vanguard Value Index

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Value Index are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guggenheim Large Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Large Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Guggenheim Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Value and Guggenheim Large

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

The idea behind Vanguard Value Index and Guggenheim Large 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.