Correlation Between Vanguard Balanced and Applied Finance
Can any of the company-specific risk be diversified away by investing in both Vanguard Balanced and Applied Finance 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 Balanced and Applied Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Balanced Index and Applied Finance Explorer, you can compare the effects of market volatilities on Vanguard Balanced and Applied Finance 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 Balanced with a short position of Applied Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Balanced and Applied Finance.
Diversification Opportunities for Vanguard Balanced and Applied Finance
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Applied is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Balanced Index and Applied Finance Explorer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Finance Explorer and Vanguard Balanced 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 Balanced Index are associated (or correlated) with Applied Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Finance Explorer has no effect on the direction of Vanguard Balanced i.e., Vanguard Balanced and Applied Finance go up and down completely randomly.
Pair Corralation between Vanguard Balanced and Applied Finance
Assuming the 90 days horizon Vanguard Balanced is expected to generate 1.66 times less return on investment than Applied Finance. But when comparing it to its historical volatility, Vanguard Balanced Index is 2.86 times less risky than Applied Finance. It trades about 0.11 of its potential returns per unit of risk. Applied Finance Explorer is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,773 in Applied Finance Explorer on August 31, 2024 and sell it today you would earn a total of 675.00 from holding Applied Finance Explorer or generate 38.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Balanced Index vs. Applied Finance Explorer
Performance |
| Timeline |
| Vanguard Balanced Index |
| Applied Finance Explorer |
Vanguard Balanced and Applied Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Balanced and Applied Finance
The main advantage of trading using opposite Vanguard Balanced and Applied Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Balanced position performs unexpectedly, Applied Finance 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 Applied Finance will offset losses from the drop in Applied Finance's long position.| Vanguard Balanced vs. Vanguard Wellesley Income | Vanguard Balanced vs. Vanguard Total Bond | Vanguard Balanced vs. Vanguard Growth Index | Vanguard Balanced vs. Vanguard Wellington Fund |
| Applied Finance vs. Firsthand Alternative Energy | Applied Finance vs. Short Oil Gas | Applied Finance vs. Fidelity Advisor Energy | Applied Finance vs. Jennison Natural Resources |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |