Correlation Between Vanguard Materials and Mast Global
Can any of the company-specific risk be diversified away by investing in both Vanguard Materials and Mast Global 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 Materials and Mast Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Materials Index and Mast Global Battery, you can compare the effects of market volatilities on Vanguard Materials and Mast Global 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 Materials with a short position of Mast Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Materials and Mast Global.
Diversification Opportunities for Vanguard Materials and Mast Global
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Mast is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Materials Index and Mast Global Battery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mast Global Battery and Vanguard Materials 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 Materials Index are associated (or correlated) with Mast Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mast Global Battery has no effect on the direction of Vanguard Materials i.e., Vanguard Materials and Mast Global go up and down completely randomly.
Pair Corralation between Vanguard Materials and Mast Global
Considering the 90-day investment horizon Vanguard Materials Index is expected to generate 0.76 times more return on investment than Mast Global. However, Vanguard Materials Index is 1.32 times less risky than Mast Global. It trades about 0.04 of its potential returns per unit of risk. Mast Global Battery is currently generating about 0.0 per unit of risk. If you would invest 17,319 in Vanguard Materials Index on August 26, 2024 and sell it today you would earn a total of 3,751 from holding Vanguard Materials Index or generate 21.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 47.08% |
| Values | Daily Returns |
Vanguard Materials Index vs. Mast Global Battery
Performance |
| Timeline |
| Vanguard Materials Index |
| Mast Global Battery |
Vanguard Materials and Mast Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Materials and Mast Global
The main advantage of trading using opposite Vanguard Materials and Mast Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Materials position performs unexpectedly, Mast Global 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 Mast Global will offset losses from the drop in Mast Global's long position.The idea behind Vanguard Materials Index and Mast Global Battery 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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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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