Correlation Between Semiconductor Bear and Vanguard Index

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Can any of the company-specific risk be diversified away by investing in both Semiconductor Bear and Vanguard Index 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 Semiconductor Bear and Vanguard Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semiconductor Bear 3X and Vanguard Index Trust, you can compare the effects of market volatilities on Semiconductor Bear and Vanguard Index 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 Semiconductor Bear with a short position of Vanguard Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semiconductor Bear and Vanguard Index.

Diversification Opportunities for Semiconductor Bear and Vanguard Index

-0.87
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Semiconductor and Vanguard is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Bear 3X and Vanguard Index Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Index Trust and Semiconductor Bear 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 Semiconductor Bear 3X are associated (or correlated) with Vanguard Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Index Trust has no effect on the direction of Semiconductor Bear i.e., Semiconductor Bear and Vanguard Index go up and down completely randomly.

Pair Corralation between Semiconductor Bear and Vanguard Index

Given the investment horizon of 90 days Semiconductor Bear 3X is expected to generate 4.33 times more return on investment than Vanguard Index. However, Semiconductor Bear is 4.33 times more volatile than Vanguard Index Trust. It trades about 0.14 of its potential returns per unit of risk. Vanguard Index Trust is currently generating about -0.27 per unit of risk. If you would invest  5,405  in Semiconductor Bear 3X on July 6, 2022 and sell it today you would earn a total of  866.00  from holding Semiconductor Bear 3X or generate 16.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Semiconductor Bear 3X  vs.  Vanguard Index Trust

 Performance (%) 
       Timeline  
Semiconductor Bear 
Semiconductor Performance
0 of 100
Over the last 90 days Semiconductor Bear 3X has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Semiconductor Bear is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Semiconductor Price Channel

Vanguard Index Trust 
Vanguard Performance
0 of 100
Over the last 90 days Vanguard Index Trust has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Vanguard Index is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Price Channel

Semiconductor Bear and Vanguard Index Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Semiconductor Bear and Vanguard Index

The main advantage of trading using opposite Semiconductor Bear and Vanguard Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semiconductor Bear position performs unexpectedly, Vanguard Index 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 Index will offset losses from the drop in Vanguard Index's long position.
Semiconductor Bear vs. Walt Disney
The idea behind Semiconductor Bear 3X and Vanguard Index Trust 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.
Vanguard Index vs. Walt Disney
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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