Correlation Between Vanguard New and Frasers Centrepoint

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

By analyzing existing cross correlation between Vanguard New Jersey and Frasers Centrepoint Trust, you can compare the effects of market volatilities on Vanguard New and Frasers Centrepoint 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 New with a short position of Frasers Centrepoint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard New and Frasers Centrepoint.

Diversification Opportunities for Vanguard New and Frasers Centrepoint

0.15

Correlation Coefficient

Vanguard New  Frasers Centrepoint

Average diversification

The 3 months correlation between Vanguard and Frasers is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard New Jersey and Frasers Centrepoint Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frasers Centrepoint Trust and Vanguard New 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 New Jersey are associated (or correlated) with Frasers Centrepoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frasers Centrepoint Trust has no effect on the direction of Vanguard New i.e., Vanguard New and Frasers Centrepoint go up and down completely randomly.

Pair Corralation between Vanguard New and Frasers Centrepoint

Assuming the 90 days horizon Vanguard New Jersey is expected to generate 0.18 times more return on investment than Frasers Centrepoint. However, Vanguard New Jersey is 5.67 times less risky than Frasers Centrepoint. It trades about -0.28 of its potential returns per unit of risk. Frasers Centrepoint Trust is currently generating about -0.22 per unit of risk. If you would invest  1,137  in Vanguard New Jersey on January 26, 2024 and sell it today you would lose (14.00) from holding Vanguard New Jersey or give up 1.23% of portfolio value over 90 days.

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

Vanguard New Jersey  vs.  Frasers Centrepoint Trust

Vanguard New Jersey

Risk-Adjusted Performance

0 of 100

Very Weak

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

Frasers Centrepoint Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frasers Centrepoint Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Frasers Centrepoint is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vanguard New and Frasers Centrepoint

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

The idea behind Vanguard New Jersey and Frasers Centrepoint Trust 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.