Correlation Between Vanguard Explorer and Vanguard Growth
Can any of the company-specific risk be diversified away by investing in both Vanguard Explorer and Vanguard Growth 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 Explorer and Vanguard Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Explorer Fund and Vanguard Growth Index, you can compare the effects of market volatilities on Vanguard Explorer and Vanguard Growth 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 Explorer with a short position of Vanguard Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Explorer and Vanguard Growth.
Diversification Opportunities for Vanguard Explorer and Vanguard Growth
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vanguard and Vanguard is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Explorer Fund and Vanguard Growth Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Growth Index and Vanguard Explorer 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 Explorer Fund are associated (or correlated) with Vanguard Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Growth Index has no effect on the direction of Vanguard Explorer i.e., Vanguard Explorer and Vanguard Growth go up and down completely randomly.
Pair Corralation between Vanguard Explorer and Vanguard Growth
Assuming the 90 days horizon Vanguard Explorer is expected to generate 2.33 times less return on investment than Vanguard Growth. In addition to that, Vanguard Explorer is 1.02 times more volatile than Vanguard Growth Index. It trades about 0.05 of its total potential returns per unit of risk. Vanguard Growth Index is currently generating about 0.13 per unit of volatility. If you would invest 11,645 in Vanguard Growth Index on November 1, 2024 and sell it today you would earn a total of 9,977 from holding Vanguard Growth Index or generate 85.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Explorer Fund vs. Vanguard Growth Index
Performance |
| Timeline |
| Vanguard Explorer |
| Vanguard Growth Index |
Vanguard Explorer and Vanguard Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Explorer and Vanguard Growth
The main advantage of trading using opposite Vanguard Explorer and Vanguard Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Explorer position performs unexpectedly, Vanguard Growth 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 Vanguard Growth will offset losses from the drop in Vanguard Growth's long position.| Vanguard Explorer vs. Vanguard International Growth | Vanguard Explorer vs. Vanguard Windsor Ii | Vanguard Explorer vs. Vanguard Primecap Fund | Vanguard Explorer vs. Vanguard Growth Fund |
| Vanguard Growth vs. Vanguard Materials Index | Vanguard Growth vs. Vanguard Limited Term Tax Exempt | Vanguard Growth vs. Vanguard Limited Term Tax Exempt | Vanguard Growth vs. Vanguard Global Minimum |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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