Correlation Between Vanguard Sumer and Vanguard Consumer
Can any of the company-specific risk be diversified away by investing in both Vanguard Sumer and Vanguard Consumer 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 Sumer and Vanguard Consumer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Sumer Discretionary and Vanguard Sumer Staples, you can compare the effects of market volatilities on Vanguard Sumer and Vanguard Consumer 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 Sumer with a short position of Vanguard Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Sumer and Vanguard Consumer.
Diversification Opportunities for Vanguard Sumer and Vanguard Consumer
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Vanguard is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Sumer Discretionary and Vanguard Sumer Staples in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Sumer Staples and Vanguard Sumer 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 Sumer Discretionary are associated (or correlated) with Vanguard Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Sumer Staples has no effect on the direction of Vanguard Sumer i.e., Vanguard Sumer and Vanguard Consumer go up and down completely randomly.
Pair Corralation between Vanguard Sumer and Vanguard Consumer
Assuming the 90 days horizon Vanguard Sumer Discretionary is expected to generate 1.81 times more return on investment than Vanguard Consumer. However, Vanguard Sumer is 1.81 times more volatile than Vanguard Sumer Staples. It trades about 0.08 of its potential returns per unit of risk. Vanguard Sumer Staples is currently generating about 0.05 per unit of risk. If you would invest 12,131 in Vanguard Sumer Discretionary on August 24, 2024 and sell it today you would earn a total of 6,954 from holding Vanguard Sumer Discretionary or generate 57.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Sumer Discretionary vs. Vanguard Sumer Staples
Performance |
| Timeline |
| Vanguard Sumer Discr |
| Vanguard Sumer Staples |
Vanguard Sumer and Vanguard Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Sumer and Vanguard Consumer
The main advantage of trading using opposite Vanguard Sumer and Vanguard Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Sumer position performs unexpectedly, Vanguard Consumer 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 Vanguard Consumer will offset losses from the drop in Vanguard Consumer's long position.| Vanguard Sumer vs. Vanguard Sumer Staples | Vanguard Sumer vs. Vanguard Industrials Index | Vanguard Sumer vs. Vanguard Financials Index | Vanguard Sumer vs. Vanguard Information Technology |
| Vanguard Consumer vs. Consumer Staples Portfolio | Vanguard Consumer vs. Consumer Staples Portfolio | Vanguard Consumer vs. Consumer Staples Portfolio | Vanguard Consumer vs. Consumer Staples Portfolio |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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