Correlation Between Vanguard Multifactor and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both Vanguard Multifactor and Vanguard Total 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 Multifactor and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Multifactor and Vanguard Total International, you can compare the effects of market volatilities on Vanguard Multifactor and Vanguard Total 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 Multifactor with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Multifactor and Vanguard Total.
Diversification Opportunities for Vanguard Multifactor and Vanguard Total
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Vanguard is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Multifactor and Vanguard Total International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Inter and Vanguard Multifactor 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 Multifactor are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Inter has no effect on the direction of Vanguard Multifactor i.e., Vanguard Multifactor and Vanguard Total go up and down completely randomly.
Pair Corralation between Vanguard Multifactor and Vanguard Total
Assuming the 90 days horizon Vanguard Multifactor is expected to under-perform the Vanguard Total. In addition to that, Vanguard Multifactor is 1.06 times more volatile than Vanguard Total International. It trades about -0.08 of its total potential returns per unit of risk. Vanguard Total International is currently generating about 0.04 per unit of volatility. If you would invest 3,335 in Vanguard Total International on September 12, 2024 and sell it today you would earn a total of 16.00 from holding Vanguard Total International or generate 0.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Multifactor vs. Vanguard Total International
Performance |
| Timeline |
| Vanguard Multifactor |
| Vanguard Total Inter |
Vanguard Multifactor and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Multifactor and Vanguard Total
The main advantage of trading using opposite Vanguard Multifactor and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Multifactor position performs unexpectedly, Vanguard Total 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 Vanguard Total will offset losses from the drop in Vanguard Total's long position.| Vanguard Multifactor vs. Oklahoma Municipal Fund | Vanguard Multifactor vs. Blrc Sgy Mnp | Vanguard Multifactor vs. The National Tax Free | Vanguard Multifactor vs. Ishares Municipal Bond |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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