Correlation Between Exchange Listed and Vanguard
Can any of the company-specific risk be diversified away by investing in both Exchange Listed and Vanguard 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 Exchange Listed and Vanguard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exchange Listed Funds and Vanguard SP 500, you can compare the effects of market volatilities on Exchange Listed and Vanguard 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 Exchange Listed with a short position of Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exchange Listed and Vanguard.
Diversification Opportunities for Exchange Listed and Vanguard
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Exchange and Vanguard is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Listed Funds and Vanguard SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP 500 and Exchange Listed 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 Exchange Listed Funds are associated (or correlated) with Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard SP 500 has no effect on the direction of Exchange Listed i.e., Exchange Listed and Vanguard go up and down completely randomly.
Pair Corralation between Exchange Listed and Vanguard
Given the investment horizon of 90 days Exchange Listed Funds is expected to under-perform the Vanguard. In addition to that, Exchange Listed is 1.55 times more volatile than Vanguard SP 500. It trades about -0.12 of its total potential returns per unit of risk. Vanguard SP 500 is currently generating about 0.15 per unit of volatility. If you would invest 54,875 in Vanguard SP 500 on September 13, 2024 and sell it today you would earn a total of 855.00 from holding Vanguard SP 500 or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Exchange Listed Funds vs. Vanguard SP 500
Performance |
| Timeline |
| Exchange Listed Funds |
| Vanguard SP 500 |
Exchange Listed and Vanguard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exchange Listed and Vanguard
The main advantage of trading using opposite Exchange Listed and Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exchange Listed position performs unexpectedly, Vanguard 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 will offset losses from the drop in Vanguard's long position.| Exchange Listed vs. Vanguard SP 500 | Exchange Listed vs. Vanguard Real Estate | Exchange Listed vs. Vanguard Total Bond | Exchange Listed vs. Vanguard High Dividend |
| Vanguard vs. Vanguard Total Stock | Vanguard vs. Vanguard High Dividend | Vanguard vs. Vanguard Information Technology | Vanguard vs. Invesco QQQ Trust |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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