Correlation Between Vanguard Global and Blue Chip

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

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

Diversification Opportunities for Vanguard Global and Blue Chip

0.99

Correlation Coefficient

Vanguard Global  Blue Chip

No risk reduction

The 3 months correlation between Vanguard and Blue is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Global Equity and Blue Chip Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Chip Growth and Vanguard Global 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 Global Equity are associated (or correlated) with Blue Chip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Chip Growth has no effect on the direction of Vanguard Global i.e., Vanguard Global and Blue Chip go up and down completely randomly.

Pair Corralation between Vanguard Global and Blue Chip

Assuming the 90 days horizon Vanguard Global is expected to generate 1.4 times less return on investment than Blue Chip. But when comparing it to its historical volatility, Vanguard Global Equity is 1.14 times less risky than Blue Chip. It trades about 0.2 of its potential returns per unit of risk. Blue Chip Growth is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,701  in Blue Chip Growth on May 5, 2025 and sell it today you would earn a total of  256.00  from holding Blue Chip Growth or generate 15.05% return on investment over 90 days.

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

Vanguard Global Equity  vs.  Blue Chip Growth

Vanguard Global Equity

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Global Equity are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Vanguard Global may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Blue Chip Growth

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Chip Growth are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Blue Chip showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard Global and Blue Chip

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

The idea behind Vanguard Global Equity and Blue Chip Growth 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.