Correlation Between ZEGA Buy and Vanguard FTSE

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

By analyzing existing cross correlation between ZEGA Buy and and Vanguard FTSE Developed, you can compare the effects of market volatilities on ZEGA Buy and Vanguard FTSE 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 ZEGA Buy with a short position of Vanguard FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZEGA Buy and Vanguard FTSE.

Diversification Opportunities for ZEGA Buy and Vanguard FTSE

0.95

Correlation Coefficient

ZEGA Buy  Vanguard FTSE

Almost no diversification

The 3 months correlation between ZEGA and Vanguard is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding ZEGA Buy and and Vanguard FTSE Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Developed and ZEGA Buy 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 ZEGA Buy and are associated (or correlated) with Vanguard FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Developed has no effect on the direction of ZEGA Buy i.e., ZEGA Buy and Vanguard FTSE go up and down completely randomly.

Pair Corralation between ZEGA Buy and Vanguard FTSE

Given the investment horizon of 90 days ZEGA Buy and is expected to under-perform the Vanguard FTSE. But the etf apears to be less risky and, when comparing its historical volatility, ZEGA Buy and is 1.18 times less risky than Vanguard FTSE. The etf trades about -0.2 of its potential returns per unit of risk. The Vanguard FTSE Developed is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  4,994  in Vanguard FTSE Developed on January 26, 2024 and sell it today you would lose (121.00) from holding Vanguard FTSE Developed or give up 2.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

ZEGA Buy and  vs.  Vanguard FTSE Developed

ZEGA Buy

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZEGA Buy and are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, ZEGA Buy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Vanguard FTSE Developed

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE Developed are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Vanguard FTSE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ZEGA Buy and Vanguard FTSE

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

The idea behind ZEGA Buy and and Vanguard FTSE Developed 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.