Correlation Between Vanguard Health and Amana Participation
Can any of the company-specific risk be diversified away by investing in both Vanguard Health and Amana Participation 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 Health and Amana Participation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Health Care and Amana Participation Fund, you can compare the effects of market volatilities on Vanguard Health and Amana Participation 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 Health with a short position of Amana Participation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Health and Amana Participation.
Diversification Opportunities for Vanguard Health and Amana Participation
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and Amana is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Health Care and Amana Participation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amana Participation and Vanguard Health 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 Health Care are associated (or correlated) with Amana Participation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amana Participation has no effect on the direction of Vanguard Health i.e., Vanguard Health and Amana Participation go up and down completely randomly.
Pair Corralation between Vanguard Health and Amana Participation
Assuming the 90 days horizon Vanguard Health Care is expected to under-perform the Amana Participation. In addition to that, Vanguard Health is 6.44 times more volatile than Amana Participation Fund. It trades about -0.17 of its total potential returns per unit of risk. Amana Participation Fund is currently generating about -0.44 per unit of volatility. If you would invest 967.00 in Amana Participation Fund on January 29, 2024 and sell it today you would lose (10.00) from holding Amana Participation Fund or give up 1.03% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Vanguard Health Care vs. Amana Participation Fund
Performance |
Timeline |
Vanguard Health Care |
Amana Participation |
Vanguard Health and Amana Participation Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard Health and Amana Participation
The main advantage of trading using opposite Vanguard Health and Amana Participation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Health position performs unexpectedly, Amana Participation 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 Amana Participation will offset losses from the drop in Amana Participation's long position.Vanguard Health vs. Vanguard Energy Fund | Vanguard Health vs. Vanguard Dividend Growth | Vanguard Health vs. Vanguard Wellington Fund | Vanguard Health vs. Vanguard Capital Opportunity |
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Check out your portfolio center.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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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