Correlation Between Vanguard World and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Vanguard World and Alibaba Group 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 World and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard World and Alibaba Group Holding, you can compare the effects of market volatilities on Vanguard World and Alibaba Group 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 World with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard World and Alibaba Group.
Diversification Opportunities for Vanguard World and Alibaba Group
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vanguard and Alibaba is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard World and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding and Vanguard World 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 World are associated (or correlated) with Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of Vanguard World i.e., Vanguard World and Alibaba Group go up and down completely randomly.
Pair Corralation between Vanguard World and Alibaba Group
Assuming the 90 days trading horizon Vanguard World is expected to generate 0.44 times more return on investment than Alibaba Group. However, Vanguard World is 2.3 times less risky than Alibaba Group. It trades about 0.04 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about -0.31 per unit of risk. If you would invest 542,000 in Vanguard World on August 29, 2024 and sell it today you would earn a total of 3,000 from holding Vanguard World or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard World vs. Alibaba Group Holding
Performance |
| Timeline |
| Vanguard World |
| Alibaba Group Holding |
Vanguard World and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard World and Alibaba Group
The main advantage of trading using opposite Vanguard World and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard World position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group's long position.| Vanguard World vs. Vanguard Funds Public | Vanguard World vs. Vanguard Specialized Funds | Vanguard World vs. Vanguard World | Vanguard World vs. Vanguard Index Funds |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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