Correlation Between Vanguard Health and Deere
Can any of the company-specific risk be diversified away by investing in both Vanguard Health and Deere 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 Deere 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 Deere Company, you can compare the effects of market volatilities on Vanguard Health and Deere 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 Deere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Health and Deere.
Diversification Opportunities for Vanguard Health and Deere
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Deere is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Health Care and Deere Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deere Company 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 Deere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deere Company has no effect on the direction of Vanguard Health i.e., Vanguard Health and Deere go up and down completely randomly.
Pair Corralation between Vanguard Health and Deere
Considering the 90-day investment horizon Vanguard Health is expected to generate 1.41 times less return on investment than Deere. But when comparing it to its historical volatility, Vanguard Health Care is 2.15 times less risky than Deere. It trades about 0.07 of its potential returns per unit of risk. Deere Company is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 34,577 in Deere Company on January 25, 2024 and sell it today you would earn a total of 4,942 from holding Deere Company or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.56% |
| Values | Daily Returns |
Vanguard Health Care vs. Deere Company
Performance |
| Timeline |
| Vanguard Health Care |
| Deere Company |
Vanguard Health and Deere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Health and Deere
The main advantage of trading using opposite Vanguard Health and Deere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Health position performs unexpectedly, Deere 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 Deere will offset losses from the drop in Deere's long position.| Vanguard Health vs. iShares Insurance ETF | Vanguard Health vs. SCOR PK | Vanguard Health vs. Morningstar Unconstrained Allocation | Vanguard Health vs. SPACE |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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