Correlation Between Vanguard Consumer and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both Vanguard Consumer and Consumer Staples 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 Consumer and Consumer Staples into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Sumer Staples and Consumer Staples Portfolio, you can compare the effects of market volatilities on Vanguard Consumer and Consumer Staples 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 Consumer with a short position of Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Consumer and Consumer Staples.
Diversification Opportunities for Vanguard Consumer and Consumer Staples
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Consumer is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Sumer Staples and Consumer Staples Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Por and Vanguard Consumer 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 Staples are associated (or correlated) with Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Por has no effect on the direction of Vanguard Consumer i.e., Vanguard Consumer and Consumer Staples go up and down completely randomly.
Pair Corralation between Vanguard Consumer and Consumer Staples
Assuming the 90 days horizon Vanguard Sumer Staples is expected to generate 0.88 times more return on investment than Consumer Staples. However, Vanguard Sumer Staples is 1.13 times less risky than Consumer Staples. It trades about 0.12 of its potential returns per unit of risk. Consumer Staples Portfolio is currently generating about -0.21 per unit of risk. If you would invest 10,675 in Vanguard Sumer Staples on August 24, 2024 and sell it today you would earn a total of 189.00 from holding Vanguard Sumer Staples or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Sumer Staples vs. Consumer Staples Portfolio
Performance |
| Timeline |
| Vanguard Sumer Staples |
| Consumer Staples Por |
Vanguard Consumer and Consumer Staples Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Consumer and Consumer Staples
The main advantage of trading using opposite Vanguard Consumer and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Consumer position performs unexpectedly, Consumer Staples 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 Consumer Staples will offset losses from the drop in Consumer Staples' long position.| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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