Correlation Between Vanguard 500 and Sextant Bond
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Sextant Bond 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 Sextant Bond 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 Sextant Bond Income, you can compare the effects of market volatilities on Vanguard 500 and Sextant Bond 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 Sextant Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Sextant Bond.
Diversification Opportunities for Vanguard 500 and Sextant Bond
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vanguard and SEXTANT is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Sextant Bond Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sextant Bond Income 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 Sextant Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sextant Bond Income has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Sextant Bond go up and down completely randomly.
Pair Corralation between Vanguard 500 and Sextant Bond
Assuming the 90 days horizon Vanguard 500 Index is expected to generate 2.39 times more return on investment than Sextant Bond. However, Vanguard 500 is 2.39 times more volatile than Sextant Bond Income. It trades about 0.03 of its potential returns per unit of risk. Sextant Bond Income is currently generating about 0.07 per unit of risk. If you would invest 55,124 in Vanguard 500 Index on October 22, 2024 and sell it today you would earn a total of 249.00 from holding Vanguard 500 Index or generate 0.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard 500 Index vs. Sextant Bond Income
Performance |
| Timeline |
| Vanguard 500 Index |
| Sextant Bond Income |
Vanguard 500 and Sextant Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Sextant Bond
The main advantage of trading using opposite Vanguard 500 and Sextant Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Sextant Bond 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 Sextant Bond will offset losses from the drop in Sextant Bond'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 |
| Sextant Bond vs. Glg Intl Small | Sextant Bond vs. Df Dent Small | Sextant Bond vs. Vy Columbia Small | Sextant Bond vs. Touchstone Small Cap |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |