Correlation Between Vanguard Health and US Global
Can any of the company-specific risk be diversified away by investing in both Vanguard Health and US Global 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 US Global 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 US Global Sea, you can compare the effects of market volatilities on Vanguard Health and US Global 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 US Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Health and US Global.
Diversification Opportunities for Vanguard Health and US Global
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and SEA is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Health Care and US Global Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Global Sea 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 US Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Global Sea has no effect on the direction of Vanguard Health i.e., Vanguard Health and US Global go up and down completely randomly.
Pair Corralation between Vanguard Health and US Global
Considering the 90-day investment horizon Vanguard Health Care is expected to under-perform the US Global. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Health Care is 1.12 times less risky than US Global. The etf trades about -0.16 of its potential returns per unit of risk. The US Global Sea is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,490 in US Global Sea on January 25, 2024 and sell it today you would earn a total of 47.00 from holding US Global Sea or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard Health Care vs. US Global Sea
Performance |
| Timeline |
| Vanguard Health Care |
| US Global Sea |
Vanguard Health and US Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Health and US Global
The main advantage of trading using opposite Vanguard Health and US Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Health position performs unexpectedly, US Global 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 US Global will offset losses from the drop in US Global's long position.| Vanguard Health vs. Vanguard Consumer Staples | Vanguard Health vs. Vanguard Financials Index | Vanguard Health vs. Vanguard Information Technology | Vanguard Health vs. Vanguard Consumer Discretionary |
| US Global vs. Materials Select Sector | US Global vs. Consumer Discretionary Select | US Global vs. Consumer Staples Select | US Global 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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