Correlation Between Vanguard Extended and Bridge Builder
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and Bridge Builder 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 Extended and Bridge Builder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Market and Bridge Builder Trust, you can compare the effects of market volatilities on Vanguard Extended and Bridge Builder 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 Extended with a short position of Bridge Builder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Bridge Builder.
Diversification Opportunities for Vanguard Extended and Bridge Builder
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Bridge is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Bridge Builder Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridge Builder Trust and Vanguard Extended 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 Extended Market are associated (or correlated) with Bridge Builder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridge Builder Trust has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Bridge Builder go up and down completely randomly.
Pair Corralation between Vanguard Extended and Bridge Builder
Assuming the 90 days horizon Vanguard Extended Market is expected to generate 1.24 times more return on investment than Bridge Builder. However, Vanguard Extended is 1.24 times more volatile than Bridge Builder Trust. It trades about 0.4 of its potential returns per unit of risk. Bridge Builder Trust is currently generating about 0.36 per unit of risk. If you would invest 13,888 in Vanguard Extended Market on September 1, 2024 and sell it today you would earn a total of 1,617 from holding Vanguard Extended Market or generate 11.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard Extended Market vs. Bridge Builder Trust
Performance |
| Timeline |
| Vanguard Extended Market |
| Bridge Builder Trust |
Vanguard Extended and Bridge Builder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and Bridge Builder
The main advantage of trading using opposite Vanguard Extended and Bridge Builder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, Bridge Builder 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 Bridge Builder will offset losses from the drop in Bridge Builder's long position.| Vanguard Extended vs. Vanguard Small Cap Index | Vanguard Extended vs. Vanguard Institutional Index | Vanguard Extended vs. Vanguard Total Bond | Vanguard Extended vs. Vanguard Total International |
| Bridge Builder vs. Bridge Builder E | Bridge Builder vs. Bridge Builder Large | Bridge Builder vs. Bridge Builder Smallmid | Bridge Builder vs. Bridge Builder International |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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