Correlation Between Vanguard Health and Japanese Small

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

By analyzing existing cross correlation between Vanguard Health Care and Japanese Small Pany, you can compare the effects of market volatilities on Vanguard Health and Japanese Small 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 Health with a short position of Japanese Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Health and Japanese Small.

Diversification Opportunities for Vanguard Health and Japanese Small

0.3

Correlation Coefficient

Vanguard Health  Japanese Small

Weak diversification

The 3 months correlation between Vanguard and Japanese is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Health Care and Japanese Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japanese Small Pany and Vanguard Health 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 Health Care are associated (or correlated) with Japanese Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japanese Small Pany has no effect on the direction of Vanguard Health i.e., Vanguard Health and Japanese Small go up and down completely randomly.

Pair Corralation between Vanguard Health and Japanese Small

Assuming the 90 days horizon Vanguard Health Care is expected to generate 1.06 times more return on investment than Japanese Small. However, Vanguard Health is 1.06 times more volatile than Japanese Small Pany. It trades about 0.17 of its potential returns per unit of risk. Japanese Small Pany is currently generating about 0.1 per unit of risk. If you would invest  17,507  in Vanguard Health Care on July 24, 2025 and sell it today you would earn a total of  1,865  from holding Vanguard Health Care or generate 10.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Vanguard Health Care  vs.  Japanese Small Pany

Vanguard Health Care

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Health Care are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Vanguard Health may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Japanese Small Pany

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Japanese Small Pany are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Japanese Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Health and Japanese Small

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

The idea behind Vanguard Health Care and Japanese Small Pany 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.