Correlation Between Purpose Multi and Vanguard Canadian

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

By analyzing existing cross correlation between Purpose Multi Strategy Market and Vanguard Canadian Aggregate, you can compare the effects of market volatilities on Purpose Multi and Vanguard Canadian 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 Purpose Multi with a short position of Vanguard Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Purpose Multi and Vanguard Canadian.

Diversification Opportunities for Purpose Multi and Vanguard Canadian

-0.32

Correlation Coefficient

Purpose Multi  Vanguard Canadian

Very good diversification

The 3 months correlation between Purpose and Vanguard is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Purpose Multi Strategy Market and Vanguard Canadian Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Canadian and Purpose Multi 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 Purpose Multi Strategy Market are associated (or correlated) with Vanguard Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Canadian has no effect on the direction of Purpose Multi i.e., Purpose Multi and Vanguard Canadian go up and down completely randomly.

Pair Corralation between Purpose Multi and Vanguard Canadian

Assuming the 90 days trading horizon Purpose Multi Strategy Market is expected to generate 1.95 times more return on investment than Vanguard Canadian. However, Purpose Multi is 1.95 times more volatile than Vanguard Canadian Aggregate. It trades about 0.13 of its potential returns per unit of risk. Vanguard Canadian Aggregate is currently generating about -0.01 per unit of risk. If you would invest  2,306  in Purpose Multi Strategy Market on April 23, 2025 and sell it today you would earn a total of  116.00  from holding Purpose Multi Strategy Market or generate 5.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Purpose Multi Strategy Market  vs.  Vanguard Canadian Aggregate

Purpose Multi Strategy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose Multi Strategy Market are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Purpose Multi is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Vanguard Canadian

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Canadian Aggregate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, Vanguard Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Purpose Multi and Vanguard Canadian

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

The idea behind Purpose Multi Strategy Market and Vanguard Canadian Aggregate 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.