Correlation Between Vanguard Health and Vanguard Consumer
Can any of the company-specific risk be diversified away by investing in both Vanguard Health and Vanguard Consumer 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 Consumer 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 Sumer Staples, you can compare the effects of market volatilities on Vanguard Health and Vanguard Consumer 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 Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Health and Vanguard Consumer.
Diversification Opportunities for Vanguard Health and Vanguard Consumer
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and Vanguard is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Health Care and Vanguard Sumer Staples in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Sumer Staples 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 Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Sumer Staples has no effect on the direction of Vanguard Health i.e., Vanguard Health and Vanguard Consumer go up and down completely randomly.
Pair Corralation between Vanguard Health and Vanguard Consumer
Assuming the 90 days horizon Vanguard Health is expected to generate 1.95 times less return on investment than Vanguard Consumer. In addition to that, Vanguard Health is 1.1 times more volatile than Vanguard Sumer Staples. It trades about 0.03 of its total potential returns per unit of risk. Vanguard Sumer Staples is currently generating about 0.06 per unit of volatility. If you would invest 9,184 in Vanguard Sumer Staples on August 28, 2024 and sell it today you would earn a total of 1,732 from holding Vanguard Sumer Staples or generate 18.86% 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 Sumer Staples
Performance |
| Timeline |
| Vanguard Health Care |
| Vanguard Sumer Staples |
Vanguard Health and Vanguard Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Health and Vanguard Consumer
The main advantage of trading using opposite Vanguard Health and Vanguard Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Health position performs unexpectedly, Vanguard Consumer 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 Consumer will offset losses from the drop in Vanguard Consumer's long position.| Vanguard Health vs. Vanguard Information Technology | Vanguard Health vs. Vanguard Sumer Staples | Vanguard Health vs. Vanguard Sumer Discretionary | Vanguard Health vs. Vanguard Financials Index |
| Vanguard Consumer vs. Kellanova | Vanguard Consumer vs. Bunge Limited | Vanguard Consumer vs. BJs Wholesale Club | Vanguard Consumer vs. Colgate Palmolive |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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