Correlation Between Vanguard Growth and Merrill Lynch
Can any of the company-specific risk be diversified away by investing in both Vanguard Growth and Merrill Lynch 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 Merrill Lynch 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 Merrill Lynch, you can compare the effects of market volatilities on Vanguard Growth and Merrill Lynch 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 Merrill Lynch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and Merrill Lynch.
Diversification Opportunities for Vanguard Growth and Merrill Lynch
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Merrill is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and Merrill Lynch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merrill Lynch 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 Merrill Lynch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merrill Lynch has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and Merrill Lynch go up and down completely randomly.
Pair Corralation between Vanguard Growth and Merrill Lynch
If you would invest 36,401 in Vanguard Growth Index on September 2, 2024 and sell it today you would earn a total of 4,512 from holding Vanguard Growth Index or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Vanguard Growth Index vs. Merrill Lynch
Performance |
| Timeline |
| Vanguard Growth Index |
| Merrill Lynch |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Vanguard Growth and Merrill Lynch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Growth and Merrill Lynch
The main advantage of trading using opposite Vanguard Growth and Merrill Lynch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Growth position performs unexpectedly, Merrill Lynch 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 Merrill Lynch will offset losses from the drop in Merrill Lynch's long position.| Vanguard Growth vs. Vanguard Value Index | Vanguard Growth vs. Vanguard Information Technology | Vanguard Growth vs. Vanguard Small Cap Growth | Vanguard Growth vs. Vanguard Dividend Appreciation |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |