Correlation Between Etho Climate and Vanguard

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

By analyzing existing cross correlation between Etho Climate Leadership and Vanguard SP Mid Cap, you can compare the effects of market volatilities on Etho Climate 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 Etho Climate with a short position of Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Etho Climate and Vanguard.

Diversification Opportunities for Etho Climate and Vanguard

0.63

Correlation Coefficient

Etho Climate  Vanguard

Poor diversification

The 3 months correlation between Etho and Vanguard is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Etho Climate Leadership and Vanguard SP Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP Mid and Etho Climate 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 Etho Climate Leadership 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 Mid has no effect on the direction of Etho Climate i.e., Etho Climate and Vanguard go up and down completely randomly.

Pair Corralation between Etho Climate and Vanguard

Given the investment horizon of 90 days Etho Climate Leadership is expected to generate 1.21 times more return on investment than Vanguard. However, Etho Climate is 1.21 times more volatile than Vanguard SP Mid Cap. It trades about -0.14 of its potential returns per unit of risk. Vanguard SP Mid Cap is currently generating about -0.22 per unit of risk. If you would invest  5,715  in Etho Climate Leadership on February 2, 2024 and sell it today you would lose (198.00) from holding Etho Climate Leadership or give up 3.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Etho Climate Leadership  vs.  Vanguard SP Mid Cap

Etho Climate Leadership

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Etho Climate Leadership has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Etho Climate is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Vanguard SP Mid

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard SP Mid Cap are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Vanguard may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Etho Climate and Vanguard

The main advantage of trading using opposite Etho Climate and Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Etho Climate 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 Etho Climate Leadership and Vanguard SP Mid Cap 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..