Correlation Between Vanguard Consumer and Vanguard Health
Can any of the company-specific risk be diversified away by investing in both Vanguard Consumer and Vanguard Health 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 Vanguard Health 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 Vanguard Health Care, you can compare the effects of market volatilities on Vanguard Consumer and Vanguard Health 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 Vanguard Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Consumer and Vanguard Health.
Diversification Opportunities for Vanguard Consumer and Vanguard Health
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and Vanguard is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Sumer Staples and Vanguard Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Health Care 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 Vanguard Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Health Care has no effect on the direction of Vanguard Consumer i.e., Vanguard Consumer and Vanguard Health go up and down completely randomly.
Pair Corralation between Vanguard Consumer and Vanguard Health
Assuming the 90 days horizon Vanguard Sumer Staples is expected to generate 0.91 times more return on investment than Vanguard Health. However, Vanguard Sumer Staples is 1.1 times less risky than Vanguard Health. It trades about 0.06 of its potential returns per unit of risk. Vanguard Health Care is currently generating about 0.03 per unit of risk. If you would invest 9,184 in Vanguard Sumer Staples on August 28, 2024 and sell it today you would earn a total of 1,732 from holding Vanguard Sumer Staples or generate 18.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Sumer Staples vs. Vanguard Health Care
Performance |
| Timeline |
| Vanguard Sumer Staples |
| Vanguard Health Care |
Vanguard Consumer and Vanguard Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Consumer and Vanguard Health
The main advantage of trading using opposite Vanguard Consumer and Vanguard Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Consumer position performs unexpectedly, Vanguard Health 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 Health will offset losses from the drop in Vanguard Health's long position.| Vanguard Consumer vs. Kellanova | Vanguard Consumer vs. Bunge Limited | Vanguard Consumer vs. BJs Wholesale Club | Vanguard Consumer vs. Colgate Palmolive |
| Vanguard Health vs. Vanguard Information Technology | Vanguard Health vs. Vanguard Sumer Staples | Vanguard Health vs. Vanguard Sumer Discretionary | Vanguard Health vs. Vanguard Financials Index |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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