Correlation Between Vanguard Energy and Health Care
Can any of the company-specific risk be diversified away by investing in both Vanguard Energy and Health Care 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 Energy and Health Care into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Energy Index and Health Care Fund, you can compare the effects of market volatilities on Vanguard Energy and Health Care 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 Energy with a short position of Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Energy and Health Care.
Diversification Opportunities for Vanguard Energy and Health Care
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Health is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Energy Index and Health Care Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Fund and Vanguard Energy 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 Energy Index are associated (or correlated) with Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Fund has no effect on the direction of Vanguard Energy i.e., Vanguard Energy and Health Care go up and down completely randomly.
Pair Corralation between Vanguard Energy and Health Care
Assuming the 90 days horizon Vanguard Energy Index is expected to generate 1.62 times more return on investment than Health Care. However, Vanguard Energy is 1.62 times more volatile than Health Care Fund. It trades about 0.06 of its potential returns per unit of risk. Health Care Fund is currently generating about 0.04 per unit of risk. If you would invest 6,175 in Vanguard Energy Index on September 2, 2024 and sell it today you would earn a total of 527.00 from holding Vanguard Energy Index or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Energy Index vs. Health Care Fund
Performance |
| Timeline |
| Vanguard Energy Index |
| Health Care Fund |
Vanguard Energy and Health Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Energy and Health Care
The main advantage of trading using opposite Vanguard Energy and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Energy position performs unexpectedly, Health Care 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 Health Care will offset losses from the drop in Health Care's long position.| Vanguard Energy vs. Vanguard Financials Index | Vanguard Energy vs. Vanguard Utilities Index | Vanguard Energy vs. Vanguard Materials Index | Vanguard Energy vs. Vanguard Sumer Staples |
| Health Care vs. Technology Fund Investor | Health Care vs. Financial Services Fund | Health Care vs. Transportation Fund Investor | Health Care vs. Banking Fund Investor |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |