Correlation Between Vest Us and Extended Market
Can any of the company-specific risk be diversified away by investing in both Vest Us and Extended Market 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 Vest Us and Extended Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vest Large Cap and Extended Market Index, you can compare the effects of market volatilities on Vest Us and Extended Market 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 Vest Us with a short position of Extended Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vest Us and Extended Market.
Diversification Opportunities for Vest Us and Extended Market
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vest and Extended is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Vest Large Cap and Extended Market Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extended Market Index and Vest Us 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 Vest Large Cap are associated (or correlated) with Extended Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extended Market Index has no effect on the direction of Vest Us i.e., Vest Us and Extended Market go up and down completely randomly.
Pair Corralation between Vest Us and Extended Market
Assuming the 90 days horizon Vest Large Cap is expected to under-perform the Extended Market. In addition to that, Vest Us is 2.36 times more volatile than Extended Market Index. It trades about -0.11 of its total potential returns per unit of risk. Extended Market Index is currently generating about 0.14 per unit of volatility. If you would invest 2,062 in Extended Market Index on October 24, 2024 and sell it today you would earn a total of 44.00 from holding Extended Market Index or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vest Large Cap vs. Extended Market Index
Performance |
| Timeline |
| Vest Large Cap |
| Extended Market Index |
Vest Us and Extended Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vest Us and Extended Market
The main advantage of trading using opposite Vest Us and Extended Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vest Us position performs unexpectedly, Extended Market 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 Extended Market will offset losses from the drop in Extended Market's long position.| Vest Us vs. Red Oak Technology | Vest Us vs. Technology Ultrasector Profund | Vest Us vs. Pgim Jennison Technology | Vest Us vs. Invesco Technology Fund |
| Extended Market vs. Qs Large Cap | Extended Market vs. Americafirst Large Cap | Extended Market vs. Vest Large Cap | Extended Market vs. Touchstone Large Cap |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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