Correlation Between American Funds and Vanguard Lifestrategy
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Vanguard Lifestrategy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Tax Advantaged and Vanguard Lifestrategy Growth, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Vanguard Lifestrategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Vanguard Lifestrategy.
Diversification Opportunities for American Funds and Vanguard Lifestrategy
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AMERICAN and Vanguard is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Tax Advantaged and Vanguard Lifestrategy Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Lifestrategy and American Funds 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 American Funds Tax Advantaged 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 American Funds i.e., American Funds and Vanguard Lifestrategy go up and down completely randomly.
Pair Corralation between American Funds and Vanguard Lifestrategy
Assuming the 90 days horizon American Funds is expected to generate 1.26 times less return on investment than Vanguard Lifestrategy. But when comparing it to its historical volatility, American Funds Tax Advantaged is 1.76 times less risky than Vanguard Lifestrategy. It trades about 0.14 of its potential returns per unit of risk. Vanguard Lifestrategy Growth is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,322 in Vanguard Lifestrategy Growth on September 3, 2024 and sell it today you would earn a total of 445.00 from holding Vanguard Lifestrategy Growth or generate 10.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Tax Advantaged vs. Vanguard Lifestrategy Growth
Performance |
| Timeline |
| American Funds Tax |
| Vanguard Lifestrategy |
American Funds and Vanguard Lifestrategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Vanguard Lifestrategy
The main advantage of trading using opposite American Funds and Vanguard Lifestrategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Vanguard Lifestrategy Moderate | American Funds vs. Vanguard Lifestrategy Income | American Funds vs. Vanguard Lifestrategy Growth | American Funds vs. Vanguard Explorer Fund |
| Vanguard Lifestrategy vs. SCOR PK | Vanguard Lifestrategy vs. HUMANA INC | Vanguard Lifestrategy vs. Aquagold International | Vanguard Lifestrategy vs. Barloworld Ltd ADR |
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.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |