Correlation Between ZEGA Buy and Vanguard

Can any of the company-specific risk be diversified away by investing in both ZEGA Buy and Vanguard 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 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 SP 500, you can compare the effects of market volatilities on ZEGA Buy and Vanguard 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZEGA Buy and Vanguard.

Diversification Opportunities for ZEGA Buy and Vanguard

0.88

Correlation Coefficient

ZEGA Buy  Vanguard

Very poor diversification

The 3 months correlation between ZEGA and Vanguard is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding ZEGA Buy and and Vanguard SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP 500 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard SP 500 has no effect on the direction of ZEGA Buy i.e., ZEGA Buy and Vanguard go up and down completely randomly.

Pair Corralation between ZEGA Buy and Vanguard

Given the investment horizon of 90 days ZEGA Buy and is expected to under-perform the Vanguard. But the etf apears to be less risky and, when comparing its historical volatility, ZEGA Buy and is 1.19 times less risky than Vanguard. The etf trades about -0.19 of its potential returns per unit of risk. The Vanguard SP 500 is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  17,725  in Vanguard SP 500 on January 26, 2024 and sell it today you would lose (226.00) from holding Vanguard SP 500 or give up 1.28% of portfolio value over 90 days.

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

ZEGA Buy and  vs.  Vanguard SP 500

ZEGA Buy

Risk-Adjusted Performance

6 of 100

Modest

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Vanguard SP 500

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard SP 500 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Vanguard is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ZEGA Buy and Vanguard

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

The idea behind ZEGA Buy and and Vanguard SP 500 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.