Correlation Between Vanguard Health and Vanguard Dividend
Can any of the company-specific risk be diversified away by investing in both Vanguard Health and Vanguard Dividend 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 Vanguard Dividend 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 Vanguard Dividend Growth, you can compare the effects of market volatilities on Vanguard Health and Vanguard Dividend 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 Vanguard Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Health and Vanguard Dividend.
Diversification Opportunities for Vanguard Health and Vanguard Dividend
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and Vanguard is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Health Care and Vanguard Dividend Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Dividend Growth 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 Vanguard Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Dividend Growth has no effect on the direction of Vanguard Health i.e., Vanguard Health and Vanguard Dividend go up and down completely randomly.
Pair Corralation between Vanguard Health and Vanguard Dividend
Assuming the 90 days horizon Vanguard Health Care is expected to under-perform the Vanguard Dividend. In addition to that, Vanguard Health is 2.07 times more volatile than Vanguard Dividend Growth. It trades about -0.05 of its total potential returns per unit of risk. Vanguard Dividend Growth is currently generating about 0.33 per unit of volatility. If you would invest 4,039 in Vanguard Dividend Growth on September 2, 2024 and sell it today you would earn a total of 132.00 from holding Vanguard Dividend Growth or generate 3.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Health Care vs. Vanguard Dividend Growth
Performance |
| Timeline |
| Vanguard Health Care |
| Vanguard Dividend Growth |
Vanguard Health and Vanguard Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Health and Vanguard Dividend
The main advantage of trading using opposite Vanguard Health and Vanguard Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Health position performs unexpectedly, Vanguard Dividend 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 Dividend will offset losses from the drop in Vanguard Dividend'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 |
| Vanguard Dividend vs. Vanguard Equity Income | Vanguard Dividend vs. Vanguard Wellesley Income | Vanguard Dividend vs. Vanguard Health Care | Vanguard Dividend vs. Vanguard Wellington Fund |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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