Correlation Between College Retirement and Vanguard Short
Can any of the company-specific risk be diversified away by investing in both College Retirement and Vanguard Short 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 Short 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 Short Term Tax Exempt, you can compare the effects of market volatilities on College Retirement and Vanguard Short 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 Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of College Retirement and Vanguard Short.
Diversification Opportunities for College Retirement and Vanguard Short
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between College and Vanguard is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding College Retirement Equities and Vanguard Short Term Tax Exempt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Short Term 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 Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Short Term has no effect on the direction of College Retirement i.e., College Retirement and Vanguard Short go up and down completely randomly.
Pair Corralation between College Retirement and Vanguard Short
Assuming the 90 days trading horizon College Retirement Equities is expected to generate 12.78 times more return on investment than Vanguard Short. However, College Retirement is 12.78 times more volatile than Vanguard Short Term Tax Exempt. It trades about 0.15 of its potential returns per unit of risk. Vanguard Short Term Tax Exempt is currently generating about 0.22 per unit of risk. If you would invest 50,327 in College Retirement Equities on October 20, 2024 and sell it today you would earn a total of 1,267 from holding College Retirement Equities or generate 2.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
College Retirement Equities vs. Vanguard Short Term Tax Exempt
Performance |
| Timeline |
| College Retirement |
| Vanguard Short Term |
College Retirement and Vanguard Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with College Retirement and Vanguard Short
The main advantage of trading using opposite College Retirement and Vanguard Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if College Retirement position performs unexpectedly, Vanguard Short 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 Short will offset losses from the drop in Vanguard Short's long position.| College Retirement vs. Vanguard Total Stock | College Retirement vs. Vanguard 500 Index | College Retirement vs. Vanguard Total Stock | College Retirement vs. Vanguard Total Stock |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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