Correlation Between College Retirement and Vanguard Total

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Can any of the company-specific risk be diversified away by investing in both College Retirement 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 College Retirement and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between College Retirement Equities and Vanguard Total Stock, you can compare the effects of market volatilities on College Retirement 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 College Retirement with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of College Retirement and Vanguard Total.

Diversification Opportunities for College Retirement and Vanguard Total

1.0
  Correlation Coefficient

No risk reduction

The 3 months correlation between College and Vanguard is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding College Retirement Equities 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 College Retirement 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 College Retirement Equities 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 College Retirement i.e., College Retirement and Vanguard Total go up and down completely randomly.

Pair Corralation between College Retirement and Vanguard Total

Assuming the 90 days trading horizon College Retirement is expected to generate 1.02 times less return on investment than Vanguard Total. But when comparing it to its historical volatility, College Retirement Equities is 1.01 times less risky than Vanguard Total. It trades about 0.12 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  9,081  in Vanguard Total Stock on September 13, 2024 and sell it today you would earn a total of  5,522  from holding Vanguard Total Stock or generate 60.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

College Retirement Equities  vs.  Vanguard Total Stock

 Performance 
       Timeline  
College Retirement 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in College Retirement Equities are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, College Retirement may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Vanguard Total Stock 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Total may actually be approaching a critical reversion point that can send shares even higher in January 2025.

College Retirement and Vanguard Total Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with College Retirement and Vanguard Total

The main advantage of trading using opposite College Retirement and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if College Retirement 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.
The idea behind College Retirement Equities and Vanguard Total Stock pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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