Correlation Between Vanguard 500 and Avvax
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Avvax 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 500 and Avvax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard 500 Index and Avvax, you can compare the effects of market volatilities on Vanguard 500 and Avvax 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 500 with a short position of Avvax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Avvax.
Diversification Opportunities for Vanguard 500 and Avvax
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Avvax is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Avvax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avvax and Vanguard 500 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 500 Index are associated (or correlated) with Avvax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avvax has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Avvax go up and down completely randomly.
Pair Corralation between Vanguard 500 and Avvax
Assuming the 90 days horizon Vanguard 500 Index is expected to generate 1.24 times more return on investment than Avvax. However, Vanguard 500 is 1.24 times more volatile than Avvax. It trades about 0.17 of its potential returns per unit of risk. Avvax is currently generating about 0.17 per unit of risk. If you would invest 29,308 in Vanguard 500 Index on September 13, 2024 and sell it today you would earn a total of 533.00 from holding Vanguard 500 Index or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard 500 Index vs. Avvax
Performance |
| Timeline |
| Vanguard 500 Index |
| Avvax |
Vanguard 500 and Avvax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Avvax
The main advantage of trading using opposite Vanguard 500 and Avvax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Avvax 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 Avvax will offset losses from the drop in Avvax's long position.| Vanguard 500 vs. Vanguard Total International | Vanguard 500 vs. Vanguard Total Bond | Vanguard 500 vs. Vanguard Small Cap Index | Vanguard 500 vs. Vanguard Reit Index |
| Avvax vs. Calamos Dynamic Convertible | Avvax vs. Fidelity Sai Convertible | Avvax vs. Rationalpier 88 Convertible | Avvax vs. Putnam Convertible Incm Gwth |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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