Correlation Between Vanguard 500 and College Retirement
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and College Retirement 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 College Retirement 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 College Retirement Equities, you can compare the effects of market volatilities on Vanguard 500 and College Retirement 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 College Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and College Retirement.
Diversification Opportunities for Vanguard 500 and College Retirement
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and College is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and College Retirement Equities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on College Retirement 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 College Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of College Retirement has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and College Retirement go up and down completely randomly.
Pair Corralation between Vanguard 500 and College Retirement
Assuming the 90 days horizon Vanguard 500 is expected to generate 1.7 times less return on investment than College Retirement. In addition to that, Vanguard 500 is 1.09 times more volatile than College Retirement Equities. It trades about 0.06 of its total potential returns per unit of risk. College Retirement Equities is currently generating about 0.1 per unit of volatility. If you would invest 34,692 in College Retirement Equities on October 25, 2024 and sell it today you would earn a total of 524.00 from holding College Retirement Equities or generate 1.51% 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. College Retirement Equities
Performance |
| Timeline |
| Vanguard 500 Index |
| College Retirement |
Vanguard 500 and College Retirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and College Retirement
The main advantage of trading using opposite Vanguard 500 and College Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, College Retirement 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 College Retirement will offset losses from the drop in College Retirement'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 |
| College Retirement vs. Ultrasmall Cap Profund Ultrasmall Cap | College Retirement vs. Applied Finance Explorer | College Retirement vs. Mutual Of America | College Retirement vs. Heartland Value Plus |
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.
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