Correlation Between Vanguard Explorer and Polen Small
Can any of the company-specific risk be diversified away by investing in both Vanguard Explorer and Polen Small 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 Polen Small 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 Polen Small, you can compare the effects of market volatilities on Vanguard Explorer and Polen Small 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 Polen Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Explorer and Polen Small.
Diversification Opportunities for Vanguard Explorer and Polen Small
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Polen is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Explorer Fund and Polen Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen Small 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 Polen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polen Small has no effect on the direction of Vanguard Explorer i.e., Vanguard Explorer and Polen Small go up and down completely randomly.
Pair Corralation between Vanguard Explorer and Polen Small
Assuming the 90 days horizon Vanguard Explorer Fund is expected to generate 0.71 times more return on investment than Polen Small. However, Vanguard Explorer Fund is 1.42 times less risky than Polen Small. It trades about -0.27 of its potential returns per unit of risk. Polen Small is currently generating about -0.22 per unit of risk. If you would invest 11,096 in Vanguard Explorer Fund on November 28, 2024 and sell it today you would lose (580.00) from holding Vanguard Explorer Fund or give up 5.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Explorer Fund vs. Polen Small
Performance |
| Timeline |
| Vanguard Explorer |
| Polen Small |
Vanguard Explorer and Polen Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Explorer and Polen Small
The main advantage of trading using opposite Vanguard Explorer and Polen Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Explorer position performs unexpectedly, Polen Small 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 Polen Small will offset losses from the drop in Polen Small'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 |
| Polen Small vs. Inverse Government Long | Polen Small vs. Blackrock Government Bond | Polen Small vs. John Hancock Government | Polen Small vs. Us Government Securities |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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