Correlation Between Vanguard 500 and Acrex
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Acrex 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 Acrex 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 Acrex, you can compare the effects of market volatilities on Vanguard 500 and Acrex 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 Acrex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Acrex.
Diversification Opportunities for Vanguard 500 and Acrex
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vanguard and Acrex is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Acrex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acrex 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 Acrex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acrex has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Acrex go up and down completely randomly.
Pair Corralation between Vanguard 500 and Acrex
Assuming the 90 days horizon Vanguard 500 Index is expected to generate 0.78 times more return on investment than Acrex. However, Vanguard 500 Index is 1.28 times less risky than Acrex. It trades about 0.12 of its potential returns per unit of risk. Acrex is currently generating about -0.05 per unit of risk. If you would invest 34,965 in Vanguard 500 Index on September 28, 2024 and sell it today you would earn a total of 20,749 from holding Vanguard 500 Index or generate 59.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 38.38% |
| Values | Daily Returns |
Vanguard 500 Index vs. Acrex
Performance |
| Timeline |
| Vanguard 500 Index |
| Acrex |
Vanguard 500 and Acrex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Acrex
The main advantage of trading using opposite Vanguard 500 and Acrex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Acrex 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 Acrex will offset losses from the drop in Acrex's long position.| Vanguard 500 vs. Vanguard International Growth | Vanguard 500 vs. Vanguard Wellington Fund | Vanguard 500 vs. Vanguard Windsor Ii |
| Acrex vs. Lord Abbett Small | Acrex vs. Fidelity Small Cap | Acrex vs. Applied Finance Explorer | Acrex 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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