Correlation Between Icon Bond and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both Icon Bond and Vanguard Total 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 Icon Bond and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icon Bond Fund and Vanguard Total Stock, you can compare the effects of market volatilities on Icon Bond and Vanguard Total 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 Icon Bond with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Bond and Vanguard Total.
Diversification Opportunities for Icon Bond and Vanguard Total
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Icon and Vanguard is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Icon Bond Fund and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and Icon Bond 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 Icon Bond Fund are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of Icon Bond i.e., Icon Bond and Vanguard Total go up and down completely randomly.
Pair Corralation between Icon Bond and Vanguard Total
Assuming the 90 days horizon Icon Bond is expected to generate 2.83 times less return on investment than Vanguard Total. But when comparing it to its historical volatility, Icon Bond Fund is 4.68 times less risky than Vanguard Total. It trades about 0.18 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 17,667 in Vanguard Total Stock on September 1, 2024 and sell it today you would earn a total of 9,705 from holding Vanguard Total Stock or generate 54.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Icon Bond Fund vs. Vanguard Total Stock
Performance |
| Timeline |
| Icon Bond Fund |
| Vanguard Total Stock |
Icon Bond and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Bond and Vanguard Total
The main advantage of trading using opposite Icon Bond and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Bond position performs unexpectedly, Vanguard Total 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 Total will offset losses from the drop in Vanguard Total's long position.| Icon Bond vs. Icon Bond Fund | Icon Bond vs. Icon Equity Income | Icon Bond vs. Icon Longshort Fund | Icon Bond vs. Icon Longshort Fund |
| Vanguard Total vs. Goldman Sachs Technology | Vanguard Total vs. Pgim Jennison Technology | Vanguard Total vs. Icon Information Technology | Vanguard Total vs. Columbia Global Technology |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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