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 Minimum, 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
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Australian and Vanguard is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Australian High Interest and Vanguard Global Minimum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Global Minimum 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 Minimum 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 7.63 times less return on investment than Vanguard Global. But when comparing it to its historical volatility, Australian High Interest is 28.98 times less risky than Vanguard Global. It trades about 0.78 of its potential returns per unit of risk. Vanguard Global Minimum is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 6,180 in Vanguard Global Minimum on September 1, 2024 and sell it today you would earn a total of 169.00 from holding Vanguard Global Minimum or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian High Interest vs. Vanguard Global Minimum
Performance |
| Timeline |
| Australian High Interest |
| Vanguard Global Minimum |
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 Global Government | Australian High vs. BetaShares Geared Australian | Australian High vs. Global X Semiconductor | Australian High vs. iShares UBS Government |
| Vanguard Global vs. Vanguard Global Aggregate | Vanguard Global vs. Vanguard Australian Fixed | Vanguard Global vs. Vanguard Global Infrastructure | Vanguard Global vs. Vanguard Global Value |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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