Correlation Between Balanced Fund and Vanguard Long-term
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Vanguard Long-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 Long-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 Long Term Bond, you can compare the effects of market volatilities on Balanced Fund and Vanguard Long-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 Long-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Vanguard Long-term.
Diversification Opportunities for Balanced Fund and Vanguard Long-term
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Balanced and Vanguard is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor and Vanguard Long Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Long 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 Long-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 Long Term has no effect on the direction of Balanced Fund i.e., Balanced Fund and Vanguard Long-term go up and down completely randomly.
Pair Corralation between Balanced Fund and Vanguard Long-term
Assuming the 90 days horizon Balanced Fund Investor is expected to generate 0.65 times more return on investment than Vanguard Long-term. However, Balanced Fund Investor is 1.55 times less risky than Vanguard Long-term. It trades about 0.1 of its potential returns per unit of risk. Vanguard Long Term Bond is currently generating about 0.01 per unit of risk. If you would invest 1,554 in Balanced Fund Investor on September 5, 2024 and sell it today you would earn a total of 479.00 from holding Balanced Fund Investor or generate 30.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Balanced Fund Investor vs. Vanguard Long Term Bond
Performance |
| Timeline |
| Balanced Fund Investor |
| Vanguard Long Term |
Balanced Fund and Vanguard Long-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Vanguard Long-term
The main advantage of trading using opposite Balanced Fund and Vanguard Long-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Vanguard Long-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 Long-term will offset losses from the drop in Vanguard Long-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 |
| Vanguard Long-term vs. Small Cap Stock | Vanguard Long-term vs. Balanced Fund Investor | Vanguard Long-term vs. Volumetric Fund Volumetric | Vanguard Long-term vs. Omni Small Cap Value |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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