Correlation Between Vanguard Growth and Swan Defined
Can any of the company-specific risk be diversified away by investing in both Vanguard Growth and Swan Defined 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 Growth and Swan Defined into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Growth Index and Swan Defined Risk, you can compare the effects of market volatilities on Vanguard Growth and Swan Defined 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 Growth with a short position of Swan Defined. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and Swan Defined.
Diversification Opportunities for Vanguard Growth and Swan Defined
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Swan is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and Swan Defined Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swan Defined Risk and Vanguard Growth 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 Growth Index are associated (or correlated) with Swan Defined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swan Defined Risk has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and Swan Defined go up and down completely randomly.
Pair Corralation between Vanguard Growth and Swan Defined
Assuming the 90 days horizon Vanguard Growth is expected to generate 2.4 times less return on investment than Swan Defined. In addition to that, Vanguard Growth is 1.0 times more volatile than Swan Defined Risk. It trades about 0.1 of its total potential returns per unit of risk. Swan Defined Risk is currently generating about 0.24 per unit of volatility. If you would invest 1,390 in Swan Defined Risk on August 30, 2024 and sell it today you would earn a total of 85.00 from holding Swan Defined Risk or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Growth Index vs. Swan Defined Risk
Performance |
| Timeline |
| Vanguard Growth Index |
| Swan Defined Risk |
Vanguard Growth and Swan Defined Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Growth and Swan Defined
The main advantage of trading using opposite Vanguard Growth and Swan Defined positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Growth position performs unexpectedly, Swan Defined 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 Swan Defined will offset losses from the drop in Swan Defined's long position.| Vanguard Growth vs. Vanguard Value Index | Vanguard Growth vs. Vanguard Mid Cap Index | Vanguard Growth vs. Vanguard Small Cap Growth | Vanguard Growth vs. Vanguard 500 Index |
| Swan Defined vs. Swan Defined Risk | Swan Defined vs. Swan Defined Risk | Swan Defined vs. Swan Defined Risk | Swan Defined vs. Swan Defined Risk |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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