Correlation Between Vanguard Australian and Betashares Inflation
Can any of the company-specific risk be diversified away by investing in both Vanguard Australian and Betashares Inflation 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 Australian and Betashares Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Australian Shares and Betashares Inflation Protected Treasury, you can compare the effects of market volatilities on Vanguard Australian and Betashares Inflation 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 Australian with a short position of Betashares Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Australian and Betashares Inflation.
Diversification Opportunities for Vanguard Australian and Betashares Inflation
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Betashares is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Australian Shares and Betashares Inflation Protected in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betashares Inflation and Vanguard Australian 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 Australian Shares are associated (or correlated) with Betashares Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betashares Inflation has no effect on the direction of Vanguard Australian i.e., Vanguard Australian and Betashares Inflation go up and down completely randomly.
Pair Corralation between Vanguard Australian and Betashares Inflation
Assuming the 90 days trading horizon Vanguard Australian Shares is expected to generate 1.57 times more return on investment than Betashares Inflation. However, Vanguard Australian is 1.57 times more volatile than Betashares Inflation Protected Treasury. It trades about 0.35 of its potential returns per unit of risk. Betashares Inflation Protected Treasury is currently generating about 0.02 per unit of risk. If you would invest 10,073 in Vanguard Australian Shares on September 2, 2024 and sell it today you would earn a total of 414.00 from holding Vanguard Australian Shares or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Australian Shares vs. Betashares Inflation Protected
Performance |
| Timeline |
| Vanguard Australian |
| Betashares Inflation |
Vanguard Australian and Betashares Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Australian and Betashares Inflation
The main advantage of trading using opposite Vanguard Australian and Betashares Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Australian position performs unexpectedly, Betashares Inflation 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 Betashares Inflation will offset losses from the drop in Betashares Inflation's long position.| Vanguard Australian vs. Vanguard Global Minimum | Vanguard Australian vs. Vanguard Global Aggregate | Vanguard Australian vs. Vanguard Australian Fixed | Vanguard Australian vs. Vanguard Global Infrastructure |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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