Correlation Between Vanguard 500 and Cref Inflation
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Cref Inflation 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 Cref Inflation 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 Cref Inflation Linked Bond, you can compare the effects of market volatilities on Vanguard 500 and Cref Inflation 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 Cref Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Cref Inflation.
Diversification Opportunities for Vanguard 500 and Cref Inflation
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Cref is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Cref Inflation Linked Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cref Inflation Linked 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 Cref Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cref Inflation Linked has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Cref Inflation go up and down completely randomly.
Pair Corralation between Vanguard 500 and Cref Inflation
Assuming the 90 days horizon Vanguard 500 Index is expected to generate 2.99 times more return on investment than Cref Inflation. However, Vanguard 500 is 2.99 times more volatile than Cref Inflation Linked Bond. It trades about 0.1 of its potential returns per unit of risk. Cref Inflation Linked Bond is currently generating about 0.18 per unit of risk. If you would invest 55,439 in Vanguard 500 Index on September 12, 2024 and sell it today you would earn a total of 555.00 from holding Vanguard 500 Index or generate 1.0% 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. Cref Inflation Linked Bond
Performance |
| Timeline |
| Vanguard 500 Index |
| Cref Inflation Linked |
Vanguard 500 and Cref Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Cref Inflation
The main advantage of trading using opposite Vanguard 500 and Cref Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Cref Inflation 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 Cref Inflation will offset losses from the drop in Cref Inflation'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 |
| Cref Inflation vs. Queens Road Small | Cref Inflation vs. Boston Partners Small | Cref Inflation vs. Valic Company I | Cref Inflation vs. Fpa Queens Road |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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