Correlation Between Vanguard Core and Eafe Fund
Can any of the company-specific risk be diversified away by investing in both Vanguard Core and Eafe Fund 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 Core and Eafe Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard E Bond and The Eafe Fund, you can compare the effects of market volatilities on Vanguard Core and Eafe Fund 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 Core with a short position of Eafe Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Core and Eafe Fund.
Diversification Opportunities for Vanguard Core and Eafe Fund
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VANGUARD and Eafe is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard E Bond and The Eafe Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eafe Fund and Vanguard Core 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 E Bond are associated (or correlated) with Eafe Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eafe Fund has no effect on the direction of Vanguard Core i.e., Vanguard Core and Eafe Fund go up and down completely randomly.
Pair Corralation between Vanguard Core and Eafe Fund
Assuming the 90 days horizon Vanguard Core is expected to generate 3.64 times less return on investment than Eafe Fund. But when comparing it to its historical volatility, Vanguard E Bond is 3.68 times less risky than Eafe Fund. It trades about 0.3 of its potential returns per unit of risk. The Eafe Fund is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,278 in The Eafe Fund on November 8, 2024 and sell it today you would earn a total of 91.00 from holding The Eafe Fund or generate 7.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard E Bond vs. The Eafe Fund
Performance |
| Timeline |
| Vanguard E Bond |
| Eafe Fund |
Vanguard Core and Eafe Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Core and Eafe Fund
The main advantage of trading using opposite Vanguard Core and Eafe Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Core position performs unexpectedly, Eafe Fund 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 Eafe Fund will offset losses from the drop in Eafe Fund's long position.| Vanguard Core vs. Vanguard Emerging Markets | Vanguard Core vs. Vanguard Ultra Short Term Bond | Vanguard Core vs. Vanguard E Bond | Vanguard Core vs. Vanguard Global Minimum |
| Eafe Fund vs. Nationwide Bailard Technology | Eafe Fund vs. Science Technology Fund | Eafe Fund vs. Global Technology Portfolio | Eafe Fund vs. Firsthand Technology Opportunities |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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