Correlation Between Vanguard Total and Volatility Shares
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Volatility Shares 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 Total and Volatility Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Bond and Volatility Shares Trust, you can compare the effects of market volatilities on Vanguard Total and Volatility Shares 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 Total with a short position of Volatility Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Volatility Shares.
Diversification Opportunities for Vanguard Total and Volatility Shares
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vanguard and Volatility is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and Volatility Shares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volatility Shares Trust and Vanguard Total 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 Total Bond are associated (or correlated) with Volatility Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volatility Shares Trust has no effect on the direction of Vanguard Total i.e., Vanguard Total and Volatility Shares go up and down completely randomly.
Pair Corralation between Vanguard Total and Volatility Shares
Considering the 90-day investment horizon Vanguard Total Bond is expected to under-perform the Volatility Shares. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Total Bond is 23.28 times less risky than Volatility Shares. The etf trades about -0.11 of its potential returns per unit of risk. The Volatility Shares Trust is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,951 in Volatility Shares Trust on August 23, 2024 and sell it today you would earn a total of 3,336 from holding Volatility Shares Trust or generate 113.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Bond vs. Volatility Shares Trust
Performance |
| Timeline |
| Vanguard Total Bond |
| Volatility Shares Trust |
Vanguard Total and Volatility Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Volatility Shares
The main advantage of trading using opposite Vanguard Total and Volatility Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Volatility Shares 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 Volatility Shares will offset losses from the drop in Volatility Shares' long position.| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard Real Estate |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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