Correlation Between Australian High and Vanguard Global
Can any of the company-specific risk be diversified away by investing in both Australian High and Vanguard Global 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 Australian High and Vanguard Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian High Interest and Vanguard Global Infrastructure, you can compare the effects of market volatilities on Australian High and Vanguard Global 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 Australian High with a short position of Vanguard Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian High and Vanguard Global.
Diversification Opportunities for Australian High and Vanguard Global
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Australian and Vanguard is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Australian High Interest and Vanguard Global Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Global Infr and Australian High 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 Australian High Interest are associated (or correlated) with Vanguard Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Global Infr has no effect on the direction of Australian High i.e., Australian High and Vanguard Global go up and down completely randomly.
Pair Corralation between Australian High and Vanguard Global
Assuming the 90 days trading horizon Australian High is expected to generate 9.29 times less return on investment than Vanguard Global. But when comparing it to its historical volatility, Australian High Interest is 49.98 times less risky than Vanguard Global. It trades about 0.84 of its potential returns per unit of risk. Vanguard Global Infrastructure is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 7,059 in Vanguard Global Infrastructure on August 26, 2024 and sell it today you would earn a total of 219.00 from holding Vanguard Global Infrastructure or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian High Interest vs. Vanguard Global Infrastructure
Performance |
| Timeline |
| Australian High Interest |
| Vanguard Global Infr |
Australian High and Vanguard Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian High and Vanguard Global
The main advantage of trading using opposite Australian High and Vanguard Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian High position performs unexpectedly, Vanguard Global 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 Global will offset losses from the drop in Vanguard Global's long position.| Australian High vs. Betashares Asia Technology | Australian High vs. CD Private Equity | Australian High vs. BetaShares Australia 200 | Australian High vs. Airlie Australian Share |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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