Correlation Between Vanguard and CI Enhanced

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

By analyzing existing cross correlation between Vanguard SP 500 and CI Enhanced Short, you can compare the effects of market volatilities on Vanguard and CI Enhanced 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 with a short position of CI Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and CI Enhanced.

Diversification Opportunities for Vanguard and CI Enhanced

0.92

Correlation Coefficient

Vanguard  CI Enhanced

Almost no diversification

The 3 months correlation between Vanguard and FSB is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 and CI Enhanced Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Enhanced Short and Vanguard 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 SP 500 are associated (or correlated) with CI Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Enhanced Short has no effect on the direction of Vanguard i.e., Vanguard and CI Enhanced go up and down completely randomly.

Pair Corralation between Vanguard and CI Enhanced

Assuming the 90 days trading horizon Vanguard SP 500 is expected to generate 5.63 times more return on investment than CI Enhanced. However, Vanguard is 5.63 times more volatile than CI Enhanced Short. It trades about 0.31 of its potential returns per unit of risk. CI Enhanced Short is currently generating about 0.13 per unit of risk. If you would invest  12,931  in Vanguard SP 500 on April 22, 2025 and sell it today you would earn a total of  2,399  from holding Vanguard SP 500 or generate 18.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Vanguard SP 500  vs.  CI Enhanced Short

Vanguard SP 500

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard SP 500 are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vanguard displayed solid returns over the last few months and may actually be approaching a breakup point.

CI Enhanced Short

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CI Enhanced Short are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, CI Enhanced is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Vanguard and CI Enhanced

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

The idea behind Vanguard SP 500 and CI Enhanced Short 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.