Correlation Between Vanguard Total and Great-west Core
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Great-west Core 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 Total and Great-west Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Bond and Great West E Bond, you can compare the effects of market volatilities on Vanguard Total and Great-west Core 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 Total with a short position of Great-west Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Great-west Core.
Diversification Opportunities for Vanguard Total and Great-west Core
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Great-west is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and Great West E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great-west Core and Vanguard Total 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 Total Bond are associated (or correlated) with Great-west Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great-west Core has no effect on the direction of Vanguard Total i.e., Vanguard Total and Great-west Core go up and down completely randomly.
Pair Corralation between Vanguard Total and Great-west Core
Assuming the 90 days horizon Vanguard Total is expected to generate 1.15 times less return on investment than Great-west Core. But when comparing it to its historical volatility, Vanguard Total Bond is 1.05 times less risky than Great-west Core. It trades about 0.03 of its potential returns per unit of risk. Great West E Bond is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 804.00 in Great West E Bond on September 3, 2024 and sell it today you would earn a total of 61.00 from holding Great West E Bond or generate 7.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Bond vs. Great West E Bond
Performance |
| Timeline |
| Vanguard Total Bond |
| Great-west Core |
Vanguard Total and Great-west Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Great-west Core
The main advantage of trading using opposite Vanguard Total and Great-west Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Great-west Core 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 Great-west Core will offset losses from the drop in Great-west Core's long position.| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Extended Market | Vanguard Total vs. Vanguard Small Cap Index | Vanguard Total vs. Vanguard Institutional Index |
| Great-west Core vs. Vanguard Total Bond | Great-west Core vs. Vanguard Total Bond | Great-west Core vs. Vanguard Total Bond | Great-west Core vs. Vanguard Total Bond |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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