Correlation Between Vanguard Advice and Vanguard Extended
Can any of the company-specific risk be diversified away by investing in both Vanguard Advice and Vanguard Extended 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 Vanguard Advice and Vanguard Extended into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Advice Select and Vanguard Extended Market, you can compare the effects of market volatilities on Vanguard Advice and Vanguard Extended 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 Vanguard Advice with a short position of Vanguard Extended. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Advice and Vanguard Extended.
Diversification Opportunities for Vanguard Advice and Vanguard Extended
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Vanguard is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Advice Select and Vanguard Extended Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Extended Market and Vanguard Advice 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 Vanguard Advice Select are associated (or correlated) with Vanguard Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Extended Market has no effect on the direction of Vanguard Advice i.e., Vanguard Advice and Vanguard Extended go up and down completely randomly.
Pair Corralation between Vanguard Advice and Vanguard Extended
Assuming the 90 days horizon Vanguard Advice is expected to generate 6.24 times less return on investment than Vanguard Extended. But when comparing it to its historical volatility, Vanguard Advice Select is 2.1 times less risky than Vanguard Extended. It trades about 0.12 of its potential returns per unit of risk. Vanguard Extended Market is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 14,083 in Vanguard Extended Market on August 28, 2024 and sell it today you would earn a total of 1,540 from holding Vanguard Extended Market or generate 10.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Advice Select vs. Vanguard Extended Market
Performance |
| Timeline |
| Vanguard Advice Select |
| Vanguard Extended Market |
Vanguard Advice and Vanguard Extended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Advice and Vanguard Extended
The main advantage of trading using opposite Vanguard Advice and Vanguard Extended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Advice position performs unexpectedly, Vanguard Extended 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 Extended will offset losses from the drop in Vanguard Extended's long position.| Vanguard Advice vs. Vanguard Energy Fund | Vanguard Advice vs. Vanguard Emerging Markets | Vanguard Advice vs. Vanguard Reit Index | Vanguard Advice vs. Vanguard Pacific Stock |
| Vanguard Extended vs. Vanguard Total International | Vanguard Extended vs. Vanguard Total Bond | Vanguard Extended vs. Vanguard Value Index | Vanguard Extended vs. Vanguard Growth 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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