Correlation Between Vanguard Institutional and GreenSky

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

Diversification Opportunities for Vanguard Institutional and GreenSky

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Vanguard and GreenSky is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Institutional Index and GreenSky Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenSky and Vanguard Institutional 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 Institutional Index are associated (or correlated) with GreenSky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenSky has no effect on the direction of Vanguard Institutional i.e., Vanguard Institutional and GreenSky go up and down completely randomly.

Pair Corralation between Vanguard Institutional and GreenSky

If you would invest  1,020  in GreenSky on March 28, 2022 and sell it today you would earn a total of  0.00  from holding GreenSky or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy2.38%
ValuesDaily Returns

Vanguard Institutional Index  vs.  GreenSky Inc

 Performance (%) 
      Timeline 
Vanguard Institutional 
Vanguard Performance
0 of 100
Over the last 90 days Vanguard Institutional Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long term up-swing for the fund investors.

Vanguard Price Channel

GreenSky 
GreenSky Performance
0 of 100
Over the last 90 days GreenSky has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly uncertain forward-looking signals, GreenSky showed solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Institutional and GreenSky Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Vanguard Institutional and GreenSky

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

Vanguard Institutional Index

Pair trading matchups for Vanguard Institutional

Northrop Grumman vs. Vanguard Institutional
Home Depot vs. Vanguard Institutional
Verizon Communications vs. Vanguard Institutional
Cincinnati Financial vs. Vanguard Institutional
Conagra Brands vs. Vanguard Institutional
Merck vs. Vanguard Institutional
Micron Technology vs. Vanguard Institutional
Chevron Corp vs. Vanguard Institutional
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Vanguard Institutional as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Vanguard Institutional's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Vanguard Institutional's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Vanguard Institutional Index.
The idea behind Vanguard Institutional Index and GreenSky 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.
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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