Correlation Between Vanguard Total and Sdwestdeutsche Salzwerke

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

Diversification Opportunities for Vanguard Total and Sdwestdeutsche Salzwerke

-0.72

Correlation Coefficient

Vanguard Total  Sdwestdeutsche Salzwerke

Pay attention - limited upside

The 3 months correlation between Vanguard and Sdwestdeutsche is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Sdwestdeutsche Salzwerke AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sdwestdeutsche Salzwerke 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 Sdwestdeutsche Salzwerke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sdwestdeutsche Salzwerke has no effect on the direction of Vanguard Total i.e., Vanguard Total and Sdwestdeutsche Salzwerke go up and down completely randomly.

Pair Corralation between Vanguard Total and Sdwestdeutsche Salzwerke

Considering the 90-day investment horizon Vanguard Total Stock is expected to generate 0.16 times more return on investment than Sdwestdeutsche Salzwerke. However, Vanguard Total Stock is 6.33 times less risky than Sdwestdeutsche Salzwerke. It trades about -0.16 of its potential returns per unit of risk. Sdwestdeutsche Salzwerke AG is currently generating about -0.04 per unit of risk. If you would invest  25,792  in Vanguard Total Stock on January 25, 2024 and sell it today you would lose (727.00) from holding Vanguard Total Stock or give up 2.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Vanguard Total Stock  vs.  Sdwestdeutsche Salzwerke AG

Vanguard Total Stock

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 6 (%) 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.

Sdwestdeutsche Salzwerke

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sdwestdeutsche Salzwerke AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Vanguard Total and Sdwestdeutsche Salzwerke

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

The idea behind Vanguard Total Stock and Sdwestdeutsche Salzwerke AG 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.