Correlation Between Vanguard Canadian and Dynamic Active

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

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

Diversification Opportunities for Vanguard Canadian and Dynamic Active

0.49

Correlation Coefficient

Vanguard Canadian  Dynamic Active

Very weak diversification

The 3 months correlation between Vanguard and Dynamic is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Canadian Short and Dynamic Active Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Active Retirement and Vanguard Canadian 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 Canadian Short are associated (or correlated) with Dynamic Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Active Retirement has no effect on the direction of Vanguard Canadian i.e., Vanguard Canadian and Dynamic Active go up and down completely randomly.

Pair Corralation between Vanguard Canadian and Dynamic Active

Assuming the 90 days trading horizon Vanguard Canadian is expected to generate 13.32 times less return on investment than Dynamic Active. But when comparing it to its historical volatility, Vanguard Canadian Short is 2.95 times less risky than Dynamic Active. It trades about 0.08 of its potential returns per unit of risk. Dynamic Active Retirement is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  2,175  in Dynamic Active Retirement on April 23, 2025 and sell it today you would earn a total of  158.00  from holding Dynamic Active Retirement or generate 7.26% return on investment over 90 days.

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

Vanguard Canadian Short  vs.  Dynamic Active Retirement

Vanguard Canadian Short

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Canadian Short are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. 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.

Dynamic Active Retirement

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Dynamic Active Retirement are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dynamic Active may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Vanguard Canadian and Dynamic Active

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

The idea behind Vanguard Canadian Short and Dynamic Active Retirement 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..