Correlation Between Vanguard 500 and Leuthold Select
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Leuthold Select 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 Leuthold Select 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 Leuthold Select Industries, you can compare the effects of market volatilities on Vanguard 500 and Leuthold Select 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 Leuthold Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Leuthold Select.
Diversification Opportunities for Vanguard 500 and Leuthold Select
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Leuthold is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Leuthold Select Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leuthold Select Indu 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 Leuthold Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leuthold Select Indu has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Leuthold Select go up and down completely randomly.
Pair Corralation between Vanguard 500 and Leuthold Select
Assuming the 90 days horizon Vanguard 500 Index is expected to generate 0.71 times more return on investment than Leuthold Select. However, Vanguard 500 Index is 1.41 times less risky than Leuthold Select. It trades about 0.13 of its potential returns per unit of risk. Leuthold Select Industries is currently generating about 0.04 per unit of risk. If you would invest 18,234 in Vanguard 500 Index on September 14, 2024 and sell it today you would earn a total of 11,445 from holding Vanguard 500 Index or generate 62.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard 500 Index vs. Leuthold Select Industries
Performance |
| Timeline |
| Vanguard 500 Index |
| Leuthold Select Indu |
Vanguard 500 and Leuthold Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Leuthold Select
The main advantage of trading using opposite Vanguard 500 and Leuthold Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Leuthold Select 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 Leuthold Select will offset losses from the drop in Leuthold Select'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 |
| Leuthold Select vs. Stone Ridge Diversified | Leuthold Select vs. Wealthbuilder Conservative Allocation | Leuthold Select vs. Tax Free Conservative Income | Leuthold Select vs. Calvert Conservative Allocation |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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