Correlation Between Vanguard Financials and Industrial Select
Can any of the company-specific risk be diversified away by investing in both Vanguard Financials and Industrial Select 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 Financials and Industrial Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Financials Index and Industrial Select Sector, you can compare the effects of market volatilities on Vanguard Financials and Industrial Select 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 Financials with a short position of Industrial Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Financials and Industrial Select.
Diversification Opportunities for Vanguard Financials and Industrial Select
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Industrial is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Financials Index and Industrial Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Select Sector and Vanguard Financials 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 Financials Index are associated (or correlated) with Industrial Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Select Sector has no effect on the direction of Vanguard Financials i.e., Vanguard Financials and Industrial Select go up and down completely randomly.
Pair Corralation between Vanguard Financials and Industrial Select
Considering the 90-day investment horizon Vanguard Financials Index is expected to generate 1.06 times more return on investment than Industrial Select. However, Vanguard Financials is 1.06 times more volatile than Industrial Select Sector. It trades about 0.11 of its potential returns per unit of risk. Industrial Select Sector is currently generating about 0.08 per unit of risk. If you would invest 8,440 in Vanguard Financials Index on January 24, 2024 and sell it today you would earn a total of 1,466 from holding Vanguard Financials Index or generate 17.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.46% |
| Values | Daily Returns |
Vanguard Financials Index vs. Industrial Select Sector
Performance |
| Timeline |
| Vanguard Financials Index |
| Industrial Select Sector |
Vanguard Financials and Industrial Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Financials and Industrial Select
The main advantage of trading using opposite Vanguard Financials and Industrial Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Financials position performs unexpectedly, Industrial Select 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 Industrial Select will offset losses from the drop in Industrial Select's long position.| Vanguard Financials vs. Virtus InfraCap Preferred | Vanguard Financials vs. XAI Octagon Floating | Vanguard Financials vs. Amplify High Income | Vanguard Financials vs. Triplepoint Venture Growth |
| Industrial Select vs. Materials Select Sector | Industrial Select vs. Consumer Discretionary Select | Industrial Select vs. Consumer Staples Select | Industrial Select vs. Health Care Select |
Check out your portfolio center.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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Stocks Directory Find actively traded stocks across global markets |