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

  Correlation Coefficient

Weak diversification

The 3 months correlation between Vanguard and GreenSky is 0.34. 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

Assuming the 90 days horizon Vanguard Institutional Index is expected to under-perform the GreenSky. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard Institutional Index is 1.45 times less risky than GreenSky. The mutual fund trades about -0.11 of its potential returns per unit of risk. The GreenSky is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,132  in GreenSky on February 20, 2022 and sell it today you would lose (112.00)  from holding GreenSky or give up 9.89% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
ValuesDaily Returns

Vanguard Institutional Index  vs.  GreenSky Inc

 Performance (%) 
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 latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Vanguard Price Channel

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 strong forward-looking signals, GreenSky is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Institutional and GreenSky Volatility Contrast

 Predicted Return Density 

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

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.


Pair trading matchups for GreenSky

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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