Correlation Between Vanguard International and Sprucegrove International
Can any of the company-specific risk be diversified away by investing in both Vanguard International and Sprucegrove International 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 International and Sprucegrove International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard International Value and Sprucegrove International Equity, you can compare the effects of market volatilities on Vanguard International and Sprucegrove International 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 International with a short position of Sprucegrove International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard International and Sprucegrove International.
Diversification Opportunities for Vanguard International and Sprucegrove International
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Sprucegrove is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard International Value and Sprucegrove International Equi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprucegrove International and Vanguard International 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 International Value are associated (or correlated) with Sprucegrove International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprucegrove International has no effect on the direction of Vanguard International i.e., Vanguard International and Sprucegrove International go up and down completely randomly.
Pair Corralation between Vanguard International and Sprucegrove International
Assuming the 90 days horizon Vanguard International Value is expected to under-perform the Sprucegrove International. In addition to that, Vanguard International is 1.52 times more volatile than Sprucegrove International Equity. It trades about -0.29 of its total potential returns per unit of risk. Sprucegrove International Equity is currently generating about -0.42 per unit of volatility. If you would invest 7,161 in Sprucegrove International Equity on October 10, 2024 and sell it today you would lose (653.00) from holding Sprucegrove International Equity or give up 9.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard International Value vs. Sprucegrove International Equi
Performance |
| Timeline |
| Vanguard International |
| Sprucegrove International |
Vanguard International and Sprucegrove International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard International and Sprucegrove International
The main advantage of trading using opposite Vanguard International and Sprucegrove International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard International position performs unexpectedly, Sprucegrove International 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 Sprucegrove International will offset losses from the drop in Sprucegrove International's long position.The idea behind Vanguard International Value and Sprucegrove International Equity 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.
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |