Correlation Between Vanguard Total and Western Asset
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Western Asset 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 Western Asset 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 Western Asset E, you can compare the effects of market volatilities on Vanguard Total and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Western Asset.
Diversification Opportunities for Vanguard Total and Western Asset
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Western is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and Western Asset E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset E 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset E has no effect on the direction of Vanguard Total i.e., Vanguard Total and Western Asset go up and down completely randomly.
Pair Corralation between Vanguard Total and Western Asset
Assuming the 90 days horizon Vanguard Total Bond is expected to generate 0.93 times more return on investment than Western Asset. However, Vanguard Total Bond is 1.07 times less risky than Western Asset. It trades about -0.03 of its potential returns per unit of risk. Western Asset E is currently generating about -0.09 per unit of risk. If you would invest 975.00 in Vanguard Total Bond on September 2, 2024 and sell it today you would lose (7.00) from holding Vanguard Total Bond or give up 0.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Bond vs. Western Asset E
Performance |
| Timeline |
| Vanguard Total Bond |
| Western Asset E |
Vanguard Total and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Western Asset
The main advantage of trading using opposite Vanguard Total and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset'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 |
| Western Asset vs. Prudential Jennison Financial | Western Asset vs. Financials Ultrasector Profund | Western Asset vs. Angel Oak Financial | Western Asset vs. John Hancock Financial |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |