Correlation Between Vanguard Health and Multi Index
Can any of the company-specific risk be diversified away by investing in both Vanguard Health and Multi Index 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 Health and Multi Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Health Care and Multi Index 2045 Lifetime, you can compare the effects of market volatilities on Vanguard Health and Multi Index 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 Health with a short position of Multi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Health and Multi Index.
Diversification Opportunities for Vanguard Health and Multi Index
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Multi is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Health Care and Multi Index 2045 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2045 and Vanguard Health 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 Health Care are associated (or correlated) with Multi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2045 has no effect on the direction of Vanguard Health i.e., Vanguard Health and Multi Index go up and down completely randomly.
Pair Corralation between Vanguard Health and Multi Index
Assuming the 90 days horizon Vanguard Health Care is expected to under-perform the Multi Index. In addition to that, Vanguard Health is 2.18 times more volatile than Multi Index 2045 Lifetime. It trades about -0.1 of its total potential returns per unit of risk. Multi Index 2045 Lifetime is currently generating about 0.14 per unit of volatility. If you would invest 1,472 in Multi Index 2045 Lifetime on September 14, 2024 and sell it today you would earn a total of 18.00 from holding Multi Index 2045 Lifetime or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Health Care vs. Multi Index 2045 Lifetime
Performance |
| Timeline |
| Vanguard Health Care |
| Multi Index 2045 |
Vanguard Health and Multi Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Health and Multi Index
The main advantage of trading using opposite Vanguard Health and Multi Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Health position performs unexpectedly, Multi Index 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 Multi Index will offset losses from the drop in Multi Index's long position.| Vanguard Health vs. Vanguard Energy Fund | Vanguard Health vs. Vanguard Dividend Growth | Vanguard Health vs. Vanguard Wellington Fund | Vanguard Health vs. Vanguard Capital Opportunity |
| Multi Index vs. Prudential Health Sciences | Multi Index vs. Delaware Healthcare Fund | Multi Index vs. Vanguard Health Care | Multi Index vs. Tekla Healthcare Opportunities |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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