Correlation Between Vanguard and CI Short
Can any of the company-specific risk be diversified away by investing in both Vanguard and CI Short 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 and CI Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard SP 500 and CI Short Term, you can compare the effects of market volatilities on Vanguard and CI Short 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 with a short position of CI Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and CI Short.
Diversification Opportunities for Vanguard and CI Short
Excellent diversification
The 3 months correlation between Vanguard and FGB is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 and CI Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Short Term and Vanguard 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 SP 500 are associated (or correlated) with CI Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Short Term has no effect on the direction of Vanguard i.e., Vanguard and CI Short go up and down completely randomly.
Pair Corralation between Vanguard and CI Short
Assuming the 90 days trading horizon Vanguard SP 500 is expected to generate 4.96 times more return on investment than CI Short. However, Vanguard is 4.96 times more volatile than CI Short Term. It trades about 0.15 of its potential returns per unit of risk. CI Short Term is currently generating about 0.14 per unit of risk. If you would invest 12,469 in Vanguard SP 500 on September 3, 2024 and sell it today you would earn a total of 2,567 from holding Vanguard SP 500 or generate 20.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard SP 500 vs. CI Short Term
Performance |
| Timeline |
| Vanguard SP 500 |
| CI Short Term |
Vanguard and CI Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and CI Short
The main advantage of trading using opposite Vanguard and CI Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, CI Short 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 CI Short will offset losses from the drop in CI Short's long position.| Vanguard vs. Vanguard FTSE Canadian | Vanguard vs. Vanguard Growth Portfolio | Vanguard vs. Vanguard SP 500 | Vanguard vs. Vanguard FTSE Canada |
| CI Short vs. BMO Short Federal | CI Short vs. BMO Short Corporate | CI Short vs. BMO Mid Corporate | CI Short vs. BMO Long Corporate |
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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