Correlation Between Vanguard Lifestrategy and Pro-blend(r) Conservative
Can any of the company-specific risk be diversified away by investing in both Vanguard Lifestrategy and Pro-blend(r) Conservative 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 Lifestrategy and Pro-blend(r) Conservative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Lifestrategy Income and Pro Blend Servative Term, you can compare the effects of market volatilities on Vanguard Lifestrategy and Pro-blend(r) Conservative 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 Lifestrategy with a short position of Pro-blend(r) Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Lifestrategy and Pro-blend(r) Conservative.
Diversification Opportunities for Vanguard Lifestrategy and Pro-blend(r) Conservative
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Pro-blend(r) is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Lifestrategy Income and Pro Blend Servative Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro-blend(r) Conservative and Vanguard Lifestrategy 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 Lifestrategy Income are associated (or correlated) with Pro-blend(r) Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro-blend(r) Conservative has no effect on the direction of Vanguard Lifestrategy i.e., Vanguard Lifestrategy and Pro-blend(r) Conservative go up and down completely randomly.
Pair Corralation between Vanguard Lifestrategy and Pro-blend(r) Conservative
Assuming the 90 days horizon Vanguard Lifestrategy Income is expected to generate 1.01 times more return on investment than Pro-blend(r) Conservative. However, Vanguard Lifestrategy is 1.01 times more volatile than Pro Blend Servative Term. It trades about 0.01 of its potential returns per unit of risk. Pro Blend Servative Term is currently generating about -0.04 per unit of risk. If you would invest 1,560 in Vanguard Lifestrategy Income on August 27, 2024 and sell it today you would earn a total of 1.00 from holding Vanguard Lifestrategy Income or generate 0.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Lifestrategy Income vs. Pro Blend Servative Term
Performance |
| Timeline |
| Vanguard Lifestrategy |
| Pro-blend(r) Conservative |
Vanguard Lifestrategy and Pro-blend(r) Conservative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Lifestrategy and Pro-blend(r) Conservative
The main advantage of trading using opposite Vanguard Lifestrategy and Pro-blend(r) Conservative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Lifestrategy position performs unexpectedly, Pro-blend(r) Conservative 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 Pro-blend(r) Conservative will offset losses from the drop in Pro-blend(r) Conservative's long position.The idea behind Vanguard Lifestrategy Income and Pro Blend Servative Term pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |