Correlation Between Vanguard Long and Vanguard Extended
Can any of the company-specific risk be diversified away by investing in both Vanguard Long and Vanguard Extended 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 Vanguard Long and Vanguard Extended into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Long Term Bond and Vanguard Extended Duration, you can compare the effects of market volatilities on Vanguard Long and Vanguard Extended 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 Vanguard Long with a short position of Vanguard Extended. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Long and Vanguard Extended.
Diversification Opportunities for Vanguard Long and Vanguard Extended
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Vanguard is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Long Term Bond and Vanguard Extended Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Extended and Vanguard Long 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 Vanguard Long Term Bond are associated (or correlated) with Vanguard Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Extended has no effect on the direction of Vanguard Long i.e., Vanguard Long and Vanguard Extended go up and down completely randomly.
Pair Corralation between Vanguard Long and Vanguard Extended
Considering the 90-day investment horizon Vanguard Long Term Bond is expected to generate 0.58 times more return on investment than Vanguard Extended. However, Vanguard Long Term Bond is 1.71 times less risky than Vanguard Extended. It trades about 0.02 of its potential returns per unit of risk. Vanguard Extended Duration is currently generating about -0.01 per unit of risk. If you would invest 6,653 in Vanguard Long Term Bond on November 9, 2024 and sell it today you would earn a total of 338.00 from holding Vanguard Long Term Bond or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Long Term Bond vs. Vanguard Extended Duration
Performance |
| Timeline |
| Vanguard Long Term |
| Vanguard Extended |
Vanguard Long and Vanguard Extended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Long and Vanguard Extended
The main advantage of trading using opposite Vanguard Long and Vanguard Extended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Long position performs unexpectedly, Vanguard Extended 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 Extended will offset losses from the drop in Vanguard Extended's long position.| Vanguard Long vs. Vanguard Intermediate Term Bond | Vanguard Long vs. Vanguard Short Term Bond | Vanguard Long vs. Vanguard Long Term Corporate | Vanguard Long vs. Vanguard Long Term Treasury |
| Vanguard Extended vs. Vanguard Long Term Treasury | Vanguard Extended vs. Vanguard Long Term Corporate | Vanguard Extended vs. Vanguard Long Term Bond | Vanguard Extended vs. PIMCO 25 Year |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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