Correlation Between Vanguard Small and Uber Technologies

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

By analyzing existing cross correlation between Vanguard Small Cap Growth and Uber Technologies, you can compare the effects of market volatilities on Vanguard Small and Uber Technologies 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 Small with a short position of Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Uber Technologies.

Diversification Opportunities for Vanguard Small and Uber Technologies

0.86

Correlation Coefficient

Vanguard Small  Uber Technologies

Very poor diversification

The 3 months correlation between Vanguard and Uber is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Growth and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies and Vanguard Small 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 Small Cap Growth are associated (or correlated) with Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Vanguard Small i.e., Vanguard Small and Uber Technologies go up and down completely randomly.

Pair Corralation between Vanguard Small and Uber Technologies

Assuming the 90 days horizon Vanguard Small Cap Growth is expected to generate 0.62 times more return on investment than Uber Technologies. However, Vanguard Small Cap Growth is 1.6 times less risky than Uber Technologies. It trades about -0.2 of its potential returns per unit of risk. Uber Technologies is currently generating about -0.3 per unit of risk. If you would invest  9,021  in Vanguard Small Cap Growth on January 26, 2024 and sell it today you would lose (427.00) from holding Vanguard Small Cap Growth or give up 4.73% of portfolio value over 90 days.

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

Vanguard Small Cap Growth  vs.  Uber Technologies

Vanguard Small Cap

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Small Cap Growth are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Uber Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Uber Technologies may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Vanguard Small and Uber Technologies

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

The idea behind Vanguard Small Cap Growth and Uber Technologies 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.