Correlation Between Vanguard Total and Altus Power

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

Diversification Opportunities for Vanguard Total and Altus Power

-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between Vanguard and Altus is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Altus Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altus Power 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 Stock are associated (or correlated) with Altus Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altus Power has no effect on the direction of Vanguard Total i.e., Vanguard Total and Altus Power go up and down completely randomly.

Pair Corralation between Vanguard Total and Altus Power

Considering the 90-day investment horizon Vanguard Total is expected to generate 11.64 times less return on investment than Altus Power. But when comparing it to its historical volatility, Vanguard Total Stock is 8.26 times less risky than Altus Power. It trades about 0.41 of its potential returns per unit of risk. Altus Power is currently generating about 0.58 of returns per unit of risk over similar time horizon. If you would invest  620.00  in Altus Power on November 4, 2022 and sell it today you would earn a total of  101.00  from holding Altus Power or generate 16.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy14.29%
ValuesDaily Returns

Vanguard Total Stock  vs.  Altus Power

 Performance (%) 
       Timeline  
Vanguard Total Stock 
Vanguard Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Vanguard Total may actually be approaching a critical reversion point that can send shares even higher in March 2023.

Vanguard Price Channel

Altus Power 
Altus Performance
0 of 100
Over the last 90 days Altus Power has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Altus Power is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Vanguard Total and Altus Power Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vanguard Total and Altus Power

The main advantage of trading using opposite Vanguard Total and Altus Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Altus Power 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 Altus Power will offset losses from the drop in Altus Power's long position.
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The idea behind Vanguard Total Stock and Altus Power 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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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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