Correlation Between Bts Enhanced and Vanguard Value

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

By analyzing existing cross correlation between Bts Enhanced Equity and Vanguard Value Index, you can compare the effects of market volatilities on Bts Enhanced and Vanguard Value 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 Bts Enhanced with a short position of Vanguard Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bts Enhanced and Vanguard Value.

Diversification Opportunities for Bts Enhanced and Vanguard Value

0.96

Correlation Coefficient

Bts Enhanced  Vanguard Value

Almost no diversification

The 3 months correlation between Bts and Vanguard is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Bts Enhanced Equity and Vanguard Value Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Value Index and Bts Enhanced 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 Bts Enhanced Equity are associated (or correlated) with Vanguard Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Value Index has no effect on the direction of Bts Enhanced i.e., Bts Enhanced and Vanguard Value go up and down completely randomly.

Pair Corralation between Bts Enhanced and Vanguard Value

Assuming the 90 days horizon Bts Enhanced is expected to generate 1.22 times less return on investment than Vanguard Value. But when comparing it to its historical volatility, Bts Enhanced Equity is 1.02 times less risky than Vanguard Value. It trades about 0.14 of its potential returns per unit of risk. Vanguard Value Index is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  6,918  in Vanguard Value Index on July 7, 2025 and sell it today you would earn a total of  397.00  from holding Vanguard Value Index or generate 5.74% return on investment over 90 days.

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

Bts Enhanced Equity  vs.  Vanguard Value Index

Bts Enhanced Equity

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Bts Enhanced Equity are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Bts Enhanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Value Index

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Value Index are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bts Enhanced and Vanguard Value

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

The idea behind Bts Enhanced Equity and Vanguard Value Index 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.