Correlation Between Vanguard Total and Nice

Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Nice 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 Nice 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 Nice Ltd ADR, you can compare the effects of market volatilities on Vanguard Total and Nice 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 Nice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Nice.

Diversification Opportunities for Vanguard Total and Nice

-0.22

Correlation Coefficient

Vanguard Total  Nice

Very good diversification

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

Pair Corralation between Vanguard Total and Nice

Considering the 90-day investment horizon Vanguard Total Stock is expected to generate 0.33 times more return on investment than Nice. However, Vanguard Total Stock is 3.07 times less risky than Nice. It trades about 0.09 of its potential returns per unit of risk. Nice Ltd ADR is currently generating about -0.17 per unit of risk. If you would invest  25,170  in Vanguard Total Stock on February 29, 2024 and sell it today you would earn a total of  1,017  from holding Vanguard Total Stock or generate 4.04% return on investment over 90 days.

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

Vanguard Total Stock  vs.  Nice Ltd ADR

Vanguard Total Stock

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Vanguard Total is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Nice Ltd ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nice Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Vanguard Total and Nice

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

The idea behind Vanguard Total Stock and Nice Ltd ADR 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.