Correlation Between Vanguard 500 and Oshaughnessy Market
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Oshaughnessy Market 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 Oshaughnessy Market 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 Oshaughnessy Market Leaders, you can compare the effects of market volatilities on Vanguard 500 and Oshaughnessy Market 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 Oshaughnessy Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Oshaughnessy Market.
Diversification Opportunities for Vanguard 500 and Oshaughnessy Market
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vanguard and Oshaughnessy is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Oshaughnessy Market Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oshaughnessy Market 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 Oshaughnessy Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oshaughnessy Market has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Oshaughnessy Market go up and down completely randomly.
Pair Corralation between Vanguard 500 and Oshaughnessy Market
Assuming the 90 days horizon Vanguard 500 Index is expected to generate 0.71 times more return on investment than Oshaughnessy Market. However, Vanguard 500 Index is 1.41 times less risky than Oshaughnessy Market. It trades about 0.1 of its potential returns per unit of risk. Oshaughnessy Market Leaders is currently generating about 0.02 per unit of risk. If you would invest 47,957 in Vanguard 500 Index on October 25, 2024 and sell it today you would earn a total of 8,246 from holding Vanguard 500 Index or generate 17.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard 500 Index vs. Oshaughnessy Market Leaders
Performance |
| Timeline |
| Vanguard 500 Index |
| Oshaughnessy Market |
Vanguard 500 and Oshaughnessy Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Oshaughnessy Market
The main advantage of trading using opposite Vanguard 500 and Oshaughnessy Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Oshaughnessy Market 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 Oshaughnessy Market will offset losses from the drop in Oshaughnessy Market's long position.| Vanguard 500 vs. Vanguard Total Stock | Vanguard 500 vs. Vanguard Total Bond | Vanguard 500 vs. Vanguard Windsor Ii | Vanguard 500 vs. Vanguard Small Cap Index |
| Oshaughnessy Market vs. T Rowe Price | Oshaughnessy Market vs. Small Midcap Dividend Income | Oshaughnessy Market vs. Credit Suisse Floating | Oshaughnessy Market vs. Boyd Watterson Limited |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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