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 Aggregate, 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
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Australian and Vanguard is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Australian High Interest and Vanguard Global Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Global Aggregate 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 Aggregate 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 1.28 times less return on investment than Vanguard Global. But when comparing it to its historical volatility, Australian High Interest is 11.46 times less risky than Vanguard Global. It trades about 0.87 of its potential returns per unit of risk. Vanguard Global Aggregate is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,190 in Vanguard Global Aggregate on August 29, 2024 and sell it today you would earn a total of 19.00 from holding Vanguard Global Aggregate or generate 0.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian High Interest vs. Vanguard Global Aggregate
Performance |
| Timeline |
| Australian High Interest |
| Vanguard Global Aggregate |
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.The idea behind Australian High Interest and Vanguard Global 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.| Vanguard Global vs. BetaShares Global Banks | Vanguard Global vs. Beta Shares SPASX | Vanguard Global vs. SPDR SPASX 200 | Vanguard Global vs. Vanguard Australian Property |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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