Correlation Between Equity Income and Vanguard Windsor
Can any of the company-specific risk be diversified away by investing in both Equity Income and Vanguard Windsor 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 Equity Income and Vanguard Windsor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Income Fund and Vanguard Windsor Fund, you can compare the effects of market volatilities on Equity Income and Vanguard Windsor 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 Equity Income with a short position of Vanguard Windsor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Income and Vanguard Windsor.
Diversification Opportunities for Equity Income and Vanguard Windsor
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Equity and Vanguard is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Equity Income Fund and Vanguard Windsor Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Windsor and Equity Income 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 Equity Income Fund are associated (or correlated) with Vanguard Windsor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Windsor has no effect on the direction of Equity Income i.e., Equity Income and Vanguard Windsor go up and down completely randomly.
Pair Corralation between Equity Income and Vanguard Windsor
Assuming the 90 days horizon Equity Income Fund is expected to under-perform the Vanguard Windsor. But the mutual fund apears to be less risky and, when comparing its historical volatility, Equity Income Fund is 1.15 times less risky than Vanguard Windsor. The mutual fund trades about -0.14 of its potential returns per unit of risk. The Vanguard Windsor Fund is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 2,440 in Vanguard Windsor Fund on September 13, 2024 and sell it today you would lose (7.00) from holding Vanguard Windsor Fund or give up 0.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Income Fund vs. Vanguard Windsor Fund
Performance |
| Timeline |
| Equity Income |
| Vanguard Windsor |
Equity Income and Vanguard Windsor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Income and Vanguard Windsor
The main advantage of trading using opposite Equity Income and Vanguard Windsor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Income position performs unexpectedly, Vanguard Windsor 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 Windsor will offset losses from the drop in Vanguard Windsor's long position.| Equity Income vs. T Rowe Price | Equity Income vs. Janus High Yield Fund | Equity Income vs. Jpmorgan High Yield | Equity Income vs. Voya High Yield |
| Vanguard Windsor vs. Vanguard Explorer Fund | Vanguard Windsor vs. Vanguard Primecap Fund | Vanguard Windsor vs. Vanguard Wellington Fund | Vanguard Windsor vs. Vanguard Windsor Ii |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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