Correlation Between Vanguard Health and Biotechnology Fund
Can any of the company-specific risk be diversified away by investing in both Vanguard Health and Biotechnology Fund 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 Health and Biotechnology Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Health Care and Biotechnology Fund Class, you can compare the effects of market volatilities on Vanguard Health and Biotechnology Fund 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 Health with a short position of Biotechnology Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Health and Biotechnology Fund.
Diversification Opportunities for Vanguard Health and Biotechnology Fund
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vanguard and Biotechnology is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Health Care and Biotechnology Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotechnology Fund Class and Vanguard Health 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 Health Care are associated (or correlated) with Biotechnology Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotechnology Fund Class has no effect on the direction of Vanguard Health i.e., Vanguard Health and Biotechnology Fund go up and down completely randomly.
Pair Corralation between Vanguard Health and Biotechnology Fund
Assuming the 90 days horizon Vanguard Health is expected to generate 2.8 times less return on investment than Biotechnology Fund. But when comparing it to its historical volatility, Vanguard Health Care is 1.21 times less risky than Biotechnology Fund. It trades about 0.08 of its potential returns per unit of risk. Biotechnology Fund Class is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 5,344 in Biotechnology Fund Class on June 5, 2025 and sell it today you would earn a total of 667.00 from holding Biotechnology Fund Class or generate 12.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
Vanguard Health Care vs. Biotechnology Fund Class
Performance |
| Timeline |
| Vanguard Health Care |
| Biotechnology Fund Class |
Vanguard Health and Biotechnology Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Health and Biotechnology Fund
The main advantage of trading using opposite Vanguard Health and Biotechnology Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Health position performs unexpectedly, Biotechnology Fund 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 Biotechnology Fund will offset losses from the drop in Biotechnology Fund's long position.| Vanguard Health vs. Vanguard Information Technology | Vanguard Health vs. Vanguard Sumer Staples | Vanguard Health vs. Vanguard Sumer Discretionary | Vanguard Health vs. Vanguard Financials Index |
| Biotechnology Fund vs. Ep Emerging Markets | Biotechnology Fund vs. Payden Emerging Markets | Biotechnology Fund vs. Barings Active Short | Biotechnology Fund vs. Franklin Emerging Market |
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 the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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