Correlation Between Vanguard Total and Bridgewater Bancshares

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

Diversification Opportunities for Vanguard Total and Bridgewater Bancshares

0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between Vanguard and Bridgewater is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and Bridgewater Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgewater Bancshares and Vanguard Total 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 Total Bond are associated (or correlated) with Bridgewater Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgewater Bancshares has no effect on the direction of Vanguard Total i.e., Vanguard Total and Bridgewater Bancshares go up and down completely randomly.

Pair Corralation between Vanguard Total and Bridgewater Bancshares

Assuming the 90 days horizon Vanguard Total Bond is expected to generate 0.21 times more return on investment than Bridgewater Bancshares. However, Vanguard Total Bond is 4.73 times less risky than Bridgewater Bancshares. It trades about 0.0 of its potential returns per unit of risk. Bridgewater Bancshares is currently generating about -0.02 per unit of risk. If you would invest  963.00  in Vanguard Total Bond on December 30, 2023 and sell it today you would lose (7.00) from holding Vanguard Total Bond or give up 0.73% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Vanguard Total Bond  vs.  Bridgewater Bancshares

 Performance 
       Timeline  
Vanguard Total Bond 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Vanguard Total Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Vanguard Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Bridgewater Bancshares 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Bridgewater Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Vanguard Total and Bridgewater Bancshares Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vanguard Total and Bridgewater Bancshares

The main advantage of trading using opposite Vanguard Total and Bridgewater Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Bridgewater Bancshares 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 Bridgewater Bancshares will offset losses from the drop in Bridgewater Bancshares' long position.
The idea behind Vanguard Total Bond and Bridgewater Bancshares 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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