Correlation Between Extended Market and Vanguard Treasury
Can any of the company-specific risk be diversified away by investing in both Extended Market and Vanguard Treasury 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 Extended Market and Vanguard Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Extended Market Index and Vanguard Treasury Money, you can compare the effects of market volatilities on Extended Market and Vanguard Treasury 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 Extended Market with a short position of Vanguard Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extended Market and Vanguard Treasury.
Diversification Opportunities for Extended Market and Vanguard Treasury
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Extended and Vanguard is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Extended Market Index and Vanguard Treasury Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Treasury Money and Extended Market 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 Extended Market Index are associated (or correlated) with Vanguard Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Treasury Money has no effect on the direction of Extended Market i.e., Extended Market and Vanguard Treasury go up and down completely randomly.
Pair Corralation between Extended Market and Vanguard Treasury
If you would invest 2,062 in Extended Market Index on October 23, 2024 and sell it today you would earn a total of 44.00 from holding Extended Market Index or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extended Market Index vs. Vanguard Treasury Money
Performance |
| Timeline |
| Extended Market Index |
| Vanguard Treasury Money |
Extended Market and Vanguard Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extended Market and Vanguard Treasury
The main advantage of trading using opposite Extended Market and Vanguard Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extended Market position performs unexpectedly, Vanguard Treasury 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 Treasury will offset losses from the drop in Vanguard Treasury's long position.| Extended Market vs. Locorr Dynamic Equity | Extended Market vs. Aqr Long Short Equity | Extended Market vs. Doubleline Core Fixed | Extended Market vs. Quantitative Longshort Equity |
| Vanguard Treasury vs. Aqr Sustainable Long Short | Vanguard Treasury vs. Goldman Sachs Local | Vanguard Treasury vs. Kinetics Market Opportunities | Vanguard Treasury vs. Extended Market Index |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |