Correlation Between First American and Vanguard Total

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Can any of the company-specific risk be diversified away by investing in both First American and Vanguard Total 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 First American and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First American Funds and Vanguard Total Stock, you can compare the effects of market volatilities on First American and Vanguard Total 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 First American with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of First American and Vanguard Total.

Diversification Opportunities for First American and Vanguard Total

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between First and Vanguard is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First American Funds and VANGUARD TOTAL STOCK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and First American 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 First American Funds are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of First American i.e., First American and Vanguard Total go up and down completely randomly.

Pair Corralation between First American and Vanguard Total

If you would invest  12,221  in Vanguard Total Stock on December 29, 2023 and sell it today you would earn a total of  439.00  from holding Vanguard Total Stock or generate 3.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

First American Funds  vs.  VANGUARD TOTAL STOCK

 Performance 
       Timeline  
First American Funds 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days First American Funds has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, First American is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Vanguard Total Stock 

Risk-Adjusted Performance

16 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock 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 Total may actually be approaching a critical reversion point that can send shares even higher in April 2024.

First American and Vanguard Total Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with First American and Vanguard Total

The main advantage of trading using opposite First American and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First American position performs unexpectedly, Vanguard Total 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 Vanguard Total will offset losses from the drop in Vanguard Total's long position.
The idea behind First American Funds and Vanguard Total Stock 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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