Correlation Between Vanguard Extended and WisdomTree
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and WisdomTree 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 Extended and WisdomTree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Duration and WisdomTree 7 10 Year, you can compare the effects of market volatilities on Vanguard Extended and WisdomTree 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 Extended with a short position of WisdomTree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and WisdomTree.
Diversification Opportunities for Vanguard Extended and WisdomTree
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and WisdomTree is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Duration and WisdomTree 7 10 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree 7 10 and Vanguard Extended 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 Extended Duration are associated (or correlated) with WisdomTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree 7 10 has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and WisdomTree go up and down completely randomly.
Pair Corralation between Vanguard Extended and WisdomTree
Considering the 90-day investment horizon Vanguard Extended Duration is expected to under-perform the WisdomTree. In addition to that, Vanguard Extended is 3.08 times more volatile than WisdomTree 7 10 Year. It trades about -0.06 of its total potential returns per unit of risk. WisdomTree 7 10 Year is currently generating about 0.0 per unit of volatility. If you would invest 4,945 in WisdomTree 7 10 Year on November 27, 2024 and sell it today you would earn a total of 2.00 from holding WisdomTree 7 10 Year or generate 0.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Extended Duration vs. WisdomTree 7 10 Year
Performance |
| Timeline |
| Vanguard Extended |
| WisdomTree 7 10 |
Vanguard Extended and WisdomTree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and WisdomTree
The main advantage of trading using opposite Vanguard Extended and WisdomTree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, WisdomTree 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 WisdomTree will offset losses from the drop in WisdomTree's long position.| 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 |
| WisdomTree vs. Vanguard 0 3 Month | WisdomTree vs. Global X Funds | WisdomTree vs. Vanguard Ultra Short Treasury | WisdomTree vs. US Treasury 12 |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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