Correlation Between Balanced Fund and Vanguard Inflation
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Vanguard Inflation 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 Balanced Fund and Vanguard Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Retail and Vanguard Inflation Protected Securities, you can compare the effects of market volatilities on Balanced Fund and Vanguard Inflation 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 Balanced Fund with a short position of Vanguard Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Vanguard Inflation.
Diversification Opportunities for Balanced Fund and Vanguard Inflation
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Balanced and Vanguard is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail and Vanguard Inflation Protected S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Inflation and Balanced Fund 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 Balanced Fund Retail are associated (or correlated) with Vanguard Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Inflation has no effect on the direction of Balanced Fund i.e., Balanced Fund and Vanguard Inflation go up and down completely randomly.
Pair Corralation between Balanced Fund and Vanguard Inflation
Assuming the 90 days horizon Balanced Fund Retail is expected to generate 1.45 times more return on investment than Vanguard Inflation. However, Balanced Fund is 1.45 times more volatile than Vanguard Inflation Protected Securities. It trades about 0.1 of its potential returns per unit of risk. Vanguard Inflation Protected Securities is currently generating about 0.04 per unit of risk. If you would invest 1,119 in Balanced Fund Retail on September 12, 2024 and sell it today you would earn a total of 345.00 from holding Balanced Fund Retail or generate 30.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Fund Retail vs. Vanguard Inflation Protected S
Performance |
| Timeline |
| Balanced Fund Retail |
| Vanguard Inflation |
Balanced Fund and Vanguard Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Vanguard Inflation
The main advantage of trading using opposite Balanced Fund and Vanguard Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Vanguard Inflation 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 Inflation will offset losses from the drop in Vanguard Inflation's long position.| Balanced Fund vs. Muirfield Fund Retail | Balanced Fund vs. Dynamic Growth Fund | Balanced Fund vs. Infrastructure Fund Retail | Balanced Fund vs. Quantex Fund Retail |
| Vanguard Inflation vs. Balanced Fund Retail | Vanguard Inflation vs. Qs Global Equity | Vanguard Inflation vs. Us Vector Equity | Vanguard Inflation vs. Locorr Dynamic Equity |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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