Correlation Between Energy Select and Vanguard Growth
Can any of the company-specific risk be diversified away by investing in both Energy Select and Vanguard Growth 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 Energy Select and Vanguard Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Select Sector and Vanguard Growth Index, you can compare the effects of market volatilities on Energy Select and Vanguard Growth 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 Energy Select with a short position of Vanguard Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Select and Vanguard Growth.
Diversification Opportunities for Energy Select and Vanguard Growth
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Energy and Vanguard is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Energy Select Sector and Vanguard Growth Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Growth Index and Energy Select 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 Energy Select Sector are associated (or correlated) with Vanguard Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Growth Index has no effect on the direction of Energy Select i.e., Energy Select and Vanguard Growth go up and down completely randomly.
Pair Corralation between Energy Select and Vanguard Growth
Considering the 90-day investment horizon Energy Select Sector is expected to under-perform the Vanguard Growth. In addition to that, Energy Select is 1.08 times more volatile than Vanguard Growth Index. It trades about -0.07 of its total potential returns per unit of risk. Vanguard Growth Index is currently generating about 0.11 per unit of volatility. If you would invest 39,913 in Vanguard Growth Index on November 18, 2024 and sell it today you would earn a total of 2,839 from holding Vanguard Growth Index or generate 7.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Select Sector vs. Vanguard Growth Index
Performance |
| Timeline |
| Energy Select Sector |
| Vanguard Growth Index |
Energy Select and Vanguard Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Select and Vanguard Growth
The main advantage of trading using opposite Energy Select and Vanguard Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Select position performs unexpectedly, Vanguard Growth 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 Vanguard Growth will offset losses from the drop in Vanguard Growth's long position.| Energy Select vs. Financial Select Sector | Energy Select vs. Health Care Select | Energy Select vs. Technology Select Sector | Energy Select vs. Utilities Select Sector |
| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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