Correlation Between Balanced Strategy and Vanguard Lifestrategy
Can any of the company-specific risk be diversified away by investing in both Balanced Strategy and Vanguard Lifestrategy 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 Strategy and Vanguard Lifestrategy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Strategy Fund and Vanguard Lifestrategy Moderate, you can compare the effects of market volatilities on Balanced Strategy and Vanguard Lifestrategy 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 Strategy with a short position of Vanguard Lifestrategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Strategy and Vanguard Lifestrategy.
Diversification Opportunities for Balanced Strategy and Vanguard Lifestrategy
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Balanced and Vanguard is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Strategy Fund and Vanguard Lifestrategy Moderate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Lifestrategy and Balanced Strategy 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 Strategy Fund are associated (or correlated) with Vanguard Lifestrategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Lifestrategy has no effect on the direction of Balanced Strategy i.e., Balanced Strategy and Vanguard Lifestrategy go up and down completely randomly.
Pair Corralation between Balanced Strategy and Vanguard Lifestrategy
Assuming the 90 days horizon Balanced Strategy Fund is expected to generate 1.0 times more return on investment than Vanguard Lifestrategy. However, Balanced Strategy is 1.0 times more volatile than Vanguard Lifestrategy Moderate. It trades about 0.23 of its potential returns per unit of risk. Vanguard Lifestrategy Moderate is currently generating about 0.15 per unit of risk. If you would invest 1,024 in Balanced Strategy Fund on November 4, 2024 and sell it today you would earn a total of 24.00 from holding Balanced Strategy Fund or generate 2.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Balanced Strategy Fund vs. Vanguard Lifestrategy Moderate
Performance |
| Timeline |
| Balanced Strategy |
| Vanguard Lifestrategy |
Balanced Strategy and Vanguard Lifestrategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Strategy and Vanguard Lifestrategy
The main advantage of trading using opposite Balanced Strategy and Vanguard Lifestrategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Strategy position performs unexpectedly, Vanguard Lifestrategy 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 Lifestrategy will offset losses from the drop in Vanguard Lifestrategy's long position.| Balanced Strategy vs. Ashmore Emerging Markets | Balanced Strategy vs. Barings Emerging Markets | Balanced Strategy vs. Siit Emerging Markets | Balanced Strategy vs. Artisan Developing World |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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