Correlation Between Vanguard Growth and MegaShort

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

By analyzing existing cross correlation between Vanguard Growth Index and MegaShort SP 500, you can compare the effects of market volatilities on Vanguard Growth and MegaShort 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 Growth with a short position of MegaShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and MegaShort.

Diversification Opportunities for Vanguard Growth and MegaShort

-0.96

Correlation Coefficient

Vanguard Growth  MegaShort

Pay attention - limited upside

The 3 months correlation between Vanguard and MegaShort is -0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and MegaShort SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MegaShort SP 500 and Vanguard 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 Vanguard Growth Index are associated (or correlated) with MegaShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MegaShort SP 500 has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and MegaShort go up and down completely randomly.

Pair Corralation between Vanguard Growth and MegaShort

Assuming the 90 days horizon Vanguard Growth Index is expected to generate 0.42 times more return on investment than MegaShort. However, Vanguard Growth Index is 2.37 times less risky than MegaShort. It trades about 0.21 of its potential returns per unit of risk. MegaShort SP 500 is currently generating about -0.13 per unit of risk. If you would invest  22,337  in Vanguard Growth Index on July 1, 2025 and sell it today you would earn a total of  2,190  from holding Vanguard Growth Index or generate 9.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Vanguard Growth Index  vs.  MegaShort SP 500

Vanguard Growth Index

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Growth Index are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Growth may actually be approaching a critical reversion point that can send shares even higher in October 2025.

MegaShort SP 500

Risk-Adjusted Performance

Weakest

Over the last 90 days MegaShort SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in October 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with Vanguard Growth and MegaShort

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

The idea behind Vanguard Growth Index and MegaShort SP 500 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.