Correlation Between Vanguard Developed and Real Estate
Can any of the company-specific risk be diversified away by investing in both Vanguard Developed and Real Estate 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 Developed and Real Estate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Developed Markets and Real Estate Debt, you can compare the effects of market volatilities on Vanguard Developed and Real Estate 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 Developed with a short position of Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Developed and Real Estate.
Diversification Opportunities for Vanguard Developed and Real Estate
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Real is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Developed Markets and Real Estate Debt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Debt and Vanguard Developed 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 Developed Markets are associated (or correlated) with Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Debt has no effect on the direction of Vanguard Developed i.e., Vanguard Developed and Real Estate go up and down completely randomly.
Pair Corralation between Vanguard Developed and Real Estate
Assuming the 90 days horizon Vanguard Developed is expected to generate 1.05 times less return on investment than Real Estate. In addition to that, Vanguard Developed is 1.02 times more volatile than Real Estate Debt. It trades about 0.05 of its total potential returns per unit of risk. Real Estate Debt is currently generating about 0.06 per unit of volatility. If you would invest 1,141 in Real Estate Debt on September 3, 2024 and sell it today you would earn a total of 268.00 from holding Real Estate Debt or generate 23.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Developed Markets vs. Real Estate Debt
Performance |
| Timeline |
| Vanguard Developed |
| Real Estate Debt |
Vanguard Developed and Real Estate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Developed and Real Estate
The main advantage of trading using opposite Vanguard Developed and Real Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Developed position performs unexpectedly, Real Estate 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 Real Estate will offset losses from the drop in Real Estate's long position.| Vanguard Developed vs. Qs Large Cap | Vanguard Developed vs. Qs Large Cap | Vanguard Developed vs. American Mutual Fund | Vanguard Developed vs. Fidelity Series 1000 |
| Real Estate vs. Artisan High Income | Real Estate vs. Gmo High Yield | Real Estate vs. Vanguard Star Fund | Real Estate vs. Siit High Yield |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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