Correlation Between Vanguard 500 and Standpoint Multi
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Standpoint Multi 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 Standpoint Multi 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 Standpoint Multi Asset, you can compare the effects of market volatilities on Vanguard 500 and Standpoint Multi 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 Standpoint Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Standpoint Multi.
Diversification Opportunities for Vanguard 500 and Standpoint Multi
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Standpoint is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Standpoint Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standpoint Multi Asset 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 Standpoint Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standpoint Multi Asset has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Standpoint Multi go up and down completely randomly.
Pair Corralation between Vanguard 500 and Standpoint Multi
Assuming the 90 days horizon Vanguard 500 Index is expected to generate 1.1 times more return on investment than Standpoint Multi. However, Vanguard 500 is 1.1 times more volatile than Standpoint Multi Asset. It trades about 0.12 of its potential returns per unit of risk. Standpoint Multi Asset is currently generating about 0.06 per unit of risk. If you would invest 41,000 in Vanguard 500 Index on August 26, 2024 and sell it today you would earn a total of 13,992 from holding Vanguard 500 Index or generate 34.13% 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. Standpoint Multi Asset
Performance |
| Timeline |
| Vanguard 500 Index |
| Standpoint Multi Asset |
Vanguard 500 and Standpoint Multi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Standpoint Multi
The main advantage of trading using opposite Vanguard 500 and Standpoint Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Standpoint Multi 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 Standpoint Multi will offset losses from the drop in Standpoint Multi'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 |
| Standpoint Multi vs. Standpoint Multi Asset | Standpoint Multi vs. Vanguard 500 Index | Standpoint Multi vs. Vanguard Materials Index | Standpoint Multi vs. Nasdaq 100 2x Strategy |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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