Correlation Between Vanguard 500 and Polen International
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Polen International 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 Polen International 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 Polen International Growth, you can compare the effects of market volatilities on Vanguard 500 and Polen International 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 Polen International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Polen International.
Diversification Opportunities for Vanguard 500 and Polen International
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Polen is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Polen International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen International 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 Polen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polen International has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Polen International go up and down completely randomly.
Pair Corralation between Vanguard 500 and Polen International
Assuming the 90 days horizon Vanguard 500 Index is expected to under-perform the Polen International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard 500 Index is 1.29 times less risky than Polen International. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Polen International Growth is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,622 in Polen International Growth on November 28, 2024 and sell it today you would earn a total of 28.00 from holding Polen International Growth or generate 1.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard 500 Index vs. Polen International Growth
Performance |
| Timeline |
| Vanguard 500 Index |
| Polen International |
Vanguard 500 and Polen International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Polen International
The main advantage of trading using opposite Vanguard 500 and Polen International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Polen International 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 Polen International will offset losses from the drop in Polen International'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 |
| Polen International vs. Polen Growth Fund | Polen International vs. Polen Growth Fund | Polen International vs. Polen Global Growth | Polen International vs. Polen Small |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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