Correlation Between Aggressive Growth and Vanguard Precious

Can any of the company-specific risk be diversified away by investing in both Aggressive Growth and Vanguard Precious 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 Aggressive Growth and Vanguard Precious into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aggressive Growth Fund and Vanguard Precious Metals, you can compare the effects of market volatilities on Aggressive Growth and Vanguard Precious 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 Aggressive Growth with a short position of Vanguard Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aggressive Growth and Vanguard Precious.

Diversification Opportunities for Aggressive Growth and Vanguard Precious

0.31

Correlation Coefficient

Aggressive Growth  Vanguard Precious

Weak diversification

The 3 months correlation between Aggressive and Vanguard is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Growth Fund and Vanguard Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Precious Metals and Aggressive 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 Aggressive Growth Fund are associated (or correlated) with Vanguard Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Precious Metals has no effect on the direction of Aggressive Growth i.e., Aggressive Growth and Vanguard Precious go up and down completely randomly.

Pair Corralation between Aggressive Growth and Vanguard Precious

Assuming the 90 days horizon Aggressive Growth Fund is expected to under-perform the Vanguard Precious. In addition to that, Aggressive Growth is 1.45 times more volatile than Vanguard Precious Metals. It trades about -0.02 of its total potential returns per unit of risk. Vanguard Precious Metals is currently generating about 0.02 per unit of volatility. If you would invest  1,304  in Vanguard Precious Metals on February 7, 2024 and sell it today you would earn a total of  4.00  from holding Vanguard Precious Metals or generate 0.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Aggressive Growth Fund  vs.  Vanguard Precious Metals

Aggressive Growth

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aggressive Growth Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Aggressive Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Precious Metals

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Precious Metals are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Vanguard Precious may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Aggressive Growth and Vanguard Precious

The main advantage of trading using opposite Aggressive Growth and Vanguard Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aggressive Growth position performs unexpectedly, Vanguard Precious 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 Precious will offset losses from the drop in Vanguard Precious' long position.

The idea behind Aggressive Growth Fund and Vanguard Precious Metals 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.