Correlation Between Vanguard Health and Vanguard Star
Can any of the company-specific risk be diversified away by investing in both Vanguard Health and Vanguard Star 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 Star 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 Star Fund, you can compare the effects of market volatilities on Vanguard Health and Vanguard Star 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 Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Health and Vanguard Star.
Diversification Opportunities for Vanguard Health and Vanguard Star
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Vanguard is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Health Care and Vanguard Star Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Star 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 Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Star has no effect on the direction of Vanguard Health i.e., Vanguard Health and Vanguard Star go up and down completely randomly.
Pair Corralation between Vanguard Health and Vanguard Star
Assuming the 90 days horizon Vanguard Health Care is expected to under-perform the Vanguard Star. In addition to that, Vanguard Health is 1.6 times more volatile than Vanguard Star Fund. It trades about -0.2 of its total potential returns per unit of risk. Vanguard Star Fund is currently generating about 0.12 per unit of volatility. If you would invest 2,884 in Vanguard Star Fund on September 2, 2024 and sell it today you would earn a total of 103.00 from holding Vanguard Star Fund or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Health Care vs. Vanguard Star Fund
Performance |
| Timeline |
| Vanguard Health Care |
| Vanguard Star |
Vanguard Health and Vanguard Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Health and Vanguard Star
The main advantage of trading using opposite Vanguard Health and Vanguard Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Health position performs unexpectedly, Vanguard Star 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 Star will offset losses from the drop in Vanguard Star'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 Star vs. Vanguard Wellington Fund | Vanguard Star vs. Vanguard Wellesley Income | Vanguard Star vs. Vanguard Windsor Ii | Vanguard Star vs. Vanguard Health Care |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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