Correlation Between Vanguard 500 and Cliffwater Corporate
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Cliffwater Corporate 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 Cliffwater Corporate 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 Cliffwater Corporate Lending, you can compare the effects of market volatilities on Vanguard 500 and Cliffwater Corporate 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 Cliffwater Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Cliffwater Corporate.
Diversification Opportunities for Vanguard 500 and Cliffwater Corporate
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Cliffwater is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Cliffwater Corporate Lending in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cliffwater Corporate 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 Cliffwater Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cliffwater Corporate has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Cliffwater Corporate go up and down completely randomly.
Pair Corralation between Vanguard 500 and Cliffwater Corporate
Assuming the 90 days horizon Vanguard 500 Index is expected to generate 14.25 times more return on investment than Cliffwater Corporate. However, Vanguard 500 is 14.25 times more volatile than Cliffwater Corporate Lending. It trades about 0.14 of its potential returns per unit of risk. Cliffwater Corporate Lending is currently generating about 0.79 per unit of risk. If you would invest 53,171 in Vanguard 500 Index on August 31, 2024 and sell it today you would earn a total of 2,292 from holding Vanguard 500 Index or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard 500 Index vs. Cliffwater Corporate Lending
Performance |
| Timeline |
| Vanguard 500 Index |
| Cliffwater Corporate |
Vanguard 500 and Cliffwater Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Cliffwater Corporate
The main advantage of trading using opposite Vanguard 500 and Cliffwater Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Cliffwater Corporate 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 Cliffwater Corporate will offset losses from the drop in Cliffwater Corporate's long position.| Vanguard 500 vs. Vanguard Total Stock | Vanguard 500 vs. Vanguard Mid Cap Index | Vanguard 500 vs. Vanguard Small Cap Index | Vanguard 500 vs. Vanguard Total Bond |
| Cliffwater Corporate vs. Alphacentric Lifesci Healthcare | Cliffwater Corporate vs. Baron Health Care | Cliffwater Corporate vs. The Gabelli Healthcare | Cliffwater Corporate vs. Fidelity Advisor Health |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |