Correlation Between Vanguard Funds and Tencent Holdings
Can any of the company-specific risk be diversified away by investing in both Vanguard Funds and Tencent Holdings 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 Funds and Tencent Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Funds Public and Tencent Holdings, you can compare the effects of market volatilities on Vanguard Funds and Tencent Holdings 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 Funds with a short position of Tencent Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Funds and Tencent Holdings.
Diversification Opportunities for Vanguard Funds and Tencent Holdings
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vanguard and Tencent is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Funds Public and Tencent Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings and Vanguard Funds 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 Funds Public are associated (or correlated) with Tencent Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tencent Holdings has no effect on the direction of Vanguard Funds i.e., Vanguard Funds and Tencent Holdings go up and down completely randomly.
Pair Corralation between Vanguard Funds and Tencent Holdings
Assuming the 90 days trading horizon Vanguard Funds is expected to generate 1.36 times less return on investment than Tencent Holdings. But when comparing it to its historical volatility, Vanguard Funds Public is 2.36 times less risky than Tencent Holdings. It trades about 0.13 of its potential returns per unit of risk. Tencent Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,901 in Tencent Holdings on September 15, 2024 and sell it today you would earn a total of 129.00 from holding Tencent Holdings or generate 2.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Funds Public vs. Tencent Holdings
Performance |
| Timeline |
| Vanguard Funds Public |
| Tencent Holdings |
Vanguard Funds and Tencent Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Funds and Tencent Holdings
The main advantage of trading using opposite Vanguard Funds and Tencent Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Funds position performs unexpectedly, Tencent Holdings 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 Tencent Holdings will offset losses from the drop in Tencent Holdings' long position.| Vanguard Funds vs. Vanguard ESG Developed | Vanguard Funds vs. Vanguard Funds Public | Vanguard Funds vs. Vanguard Funds PLC | Vanguard Funds vs. Vanguard Funds Public |
| Tencent Holdings vs. BYD Company Limited | Tencent Holdings vs. Alibaba Group Holdings | Tencent Holdings vs. Xiaomi | Tencent Holdings vs. Baidu Inc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |