Correlation Between Vanguard 500 and Barings Active
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Barings Active 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 Barings Active 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 Barings Active Short, you can compare the effects of market volatilities on Vanguard 500 and Barings Active 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 Barings Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Barings Active.
Diversification Opportunities for Vanguard 500 and Barings Active
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Barings is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Barings Active Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Active Short 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 Barings Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Active Short has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Barings Active go up and down completely randomly.
Pair Corralation between Vanguard 500 and Barings Active
Assuming the 90 days horizon Vanguard 500 Index is expected to generate 5.19 times more return on investment than Barings Active. However, Vanguard 500 is 5.19 times more volatile than Barings Active Short. It trades about 0.11 of its potential returns per unit of risk. Barings Active Short is currently generating about 0.17 per unit of risk. If you would invest 19,025 in Vanguard 500 Index on August 24, 2024 and sell it today you would earn a total of 10,129 from holding Vanguard 500 Index or generate 53.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard 500 Index vs. Barings Active Short
Performance |
| Timeline |
| Vanguard 500 Index |
| Barings Active Short |
Vanguard 500 and Barings Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Barings Active
The main advantage of trading using opposite Vanguard 500 and Barings Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Barings Active 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 Barings Active will offset losses from the drop in Barings Active's long position.| Vanguard 500 vs. Siit Ultra Short | Vanguard 500 vs. T Rowe Price | Vanguard 500 vs. Extended Market Index | Vanguard 500 vs. Old Westbury Short Term |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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