Correlation Between Vanguard 500 and Fundvantage Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Fundvantage Trust 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 Fundvantage Trust 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 Fundvantage Trust , you can compare the effects of market volatilities on Vanguard 500 and Fundvantage Trust 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 Fundvantage Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Fundvantage Trust.
Diversification Opportunities for Vanguard 500 and Fundvantage Trust
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vanguard and Fundvantage is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Fundvantage Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundvantage Trust 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 Fundvantage Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundvantage Trust has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Fundvantage Trust go up and down completely randomly.
Pair Corralation between Vanguard 500 and Fundvantage Trust
Assuming the 90 days horizon Vanguard 500 is expected to generate 34.88 times less return on investment than Fundvantage Trust. But when comparing it to its historical volatility, Vanguard 500 Index is 68.91 times less risky than Fundvantage Trust. It trades about 0.11 of its potential returns per unit of risk. Fundvantage Trust is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Fundvantage Trust on September 3, 2024 and sell it today you would earn a total of 99.00 from holding Fundvantage Trust or generate 9900.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 63.43% |
| Values | Daily Returns |
Vanguard 500 Index vs. Fundvantage Trust
Performance |
| Timeline |
| Vanguard 500 Index |
| Fundvantage Trust |
Vanguard 500 and Fundvantage Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Fundvantage Trust
The main advantage of trading using opposite Vanguard 500 and Fundvantage Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Fundvantage Trust 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 Fundvantage Trust will offset losses from the drop in Fundvantage Trust'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 |
| Fundvantage Trust vs. Vanguard Total Stock | Fundvantage Trust vs. Vanguard 500 Index | Fundvantage Trust vs. Vanguard Total Stock | Fundvantage Trust vs. Vanguard Total Stock |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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