Correlation Between Vanguard Russell and SoFi Select

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Can any of the company-specific risk be diversified away by investing in both Vanguard Russell and SoFi Select 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 Russell and SoFi Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Russell 1000 and SoFi Select 500, you can compare the effects of market volatilities on Vanguard Russell and SoFi Select 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 Russell with a short position of SoFi Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Russell and SoFi Select.

Diversification Opportunities for Vanguard Russell and SoFi Select

0.99
  Correlation Coefficient

No risk reduction

The 3 months correlation between Vanguard and SoFi is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Russell 1000 and SoFi Select 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoFi Select 500 and Vanguard Russell 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 Russell 1000 are associated (or correlated) with SoFi Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoFi Select 500 has no effect on the direction of Vanguard Russell i.e., Vanguard Russell and SoFi Select go up and down completely randomly.

Pair Corralation between Vanguard Russell and SoFi Select

Assuming the 90 days horizon Vanguard Russell 1000 is expected to generate 1.14 times more return on investment than SoFi Select. However, Vanguard Russell is 1.14 times more volatile than SoFi Select 500. It trades about 0.12 of its potential returns per unit of risk. SoFi Select 500 is currently generating about 0.11 per unit of risk. If you would invest  43,623  in Vanguard Russell 1000 on August 30, 2024 and sell it today you would earn a total of  34,606  from holding Vanguard Russell 1000 or generate 79.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Vanguard Russell 1000  vs.  SoFi Select 500

 Performance 
       Timeline  
Vanguard Russell 1000 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Russell 1000 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Vanguard Russell may actually be approaching a critical reversion point that can send shares even higher in December 2024.
SoFi Select 500 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in SoFi Select 500 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, SoFi Select may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Vanguard Russell and SoFi Select Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vanguard Russell and SoFi Select

The main advantage of trading using opposite Vanguard Russell and SoFi Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Russell position performs unexpectedly, SoFi Select 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 SoFi Select will offset losses from the drop in SoFi Select's long position.
The idea behind Vanguard Russell 1000 and SoFi Select 500 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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