Correlation Between Vanguard Total and Astor Star

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

By analyzing existing cross correlation between Vanguard Total Bond and Astor Star Fund, you can compare the effects of market volatilities on Vanguard Total and Astor Star 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 Total with a short position of Astor Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Astor Star.

Diversification Opportunities for Vanguard Total and Astor Star

-0.19

Correlation Coefficient

Vanguard Total  Astor Star

Good diversification

The 3 months correlation between Vanguard and Astor is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and Astor Star Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astor Star Fund and Vanguard Total 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 Total Bond are associated (or correlated) with Astor Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astor Star Fund has no effect on the direction of Vanguard Total i.e., Vanguard Total and Astor Star go up and down completely randomly.

Pair Corralation between Vanguard Total and Astor Star

Considering the 90-day investment horizon Vanguard Total Bond is expected to generate 0.8 times more return on investment than Astor Star. However, Vanguard Total Bond is 1.24 times less risky than Astor Star. It trades about -0.19 of its potential returns per unit of risk. Astor Star Fund is currently generating about -0.17 per unit of risk. If you would invest  7,190  in Vanguard Total Bond on January 19, 2024 and sell it today you would lose (120.00) from holding Vanguard Total Bond or give up 1.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Vanguard Total Bond  vs.  Astor Star Fund

Vanguard Total Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Total Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Vanguard Total is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Astor Star Fund

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Astor Star Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Astor Star is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Total and Astor Star

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

The idea behind Vanguard Total Bond and Astor Star Fund 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.