Correlation Between Balanced Fund and Vanguard Short-term
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Vanguard Short-term 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 Fund and Vanguard Short-term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Investor and Vanguard Short Term Bond, you can compare the effects of market volatilities on Balanced Fund and Vanguard Short-term 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 Fund with a short position of Vanguard Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Vanguard Short-term.
Diversification Opportunities for Balanced Fund and Vanguard Short-term
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Balanced and Vanguard is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor and Vanguard Short Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Short Term and Balanced Fund 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 Fund Investor are associated (or correlated) with Vanguard Short-term. 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 Balanced Fund i.e., Balanced Fund and Vanguard Short-term go up and down completely randomly.
Pair Corralation between Balanced Fund and Vanguard Short-term
Assuming the 90 days horizon Balanced Fund Investor is expected to generate 3.4 times more return on investment than Vanguard Short-term. However, Balanced Fund is 3.4 times more volatile than Vanguard Short Term Bond. It trades about 0.39 of its potential returns per unit of risk. Vanguard Short Term Bond is currently generating about 0.04 per unit of risk. If you would invest 1,956 in Balanced Fund Investor on September 3, 2024 and sell it today you would earn a total of 72.00 from holding Balanced Fund Investor or generate 3.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Fund Investor vs. Vanguard Short Term Bond
Performance |
| Timeline |
| Balanced Fund Investor |
| Vanguard Short Term |
Balanced Fund and Vanguard Short-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Vanguard Short-term
The main advantage of trading using opposite Balanced Fund and Vanguard Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Vanguard Short-term 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-term will offset losses from the drop in Vanguard Short-term's long position.| Balanced Fund vs. Select Fund Investor | Balanced Fund vs. Heritage Fund Investor | Balanced Fund vs. Value Fund Investor | Balanced Fund vs. Growth Fund Investor |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |