Correlation Between Vanguard Target and Guidemark(r) Small/mid
Can any of the company-specific risk be diversified away by investing in both Vanguard Target and Guidemark(r) Small/mid 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 Target and Guidemark(r) Small/mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Target Retirement and Guidemark Smallmid Cap, you can compare the effects of market volatilities on Vanguard Target and Guidemark(r) Small/mid 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 Target with a short position of Guidemark(r) Small/mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Target and Guidemark(r) Small/mid.
Diversification Opportunities for Vanguard Target and Guidemark(r) Small/mid
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Guidemark(r) is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Target Retirement and Guidemark Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Smallmid Cap and Vanguard Target 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 Target Retirement are associated (or correlated) with Guidemark(r) Small/mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Smallmid Cap has no effect on the direction of Vanguard Target i.e., Vanguard Target and Guidemark(r) Small/mid go up and down completely randomly.
Pair Corralation between Vanguard Target and Guidemark(r) Small/mid
Assuming the 90 days horizon Vanguard Target is expected to generate 11.94 times less return on investment than Guidemark(r) Small/mid. But when comparing it to its historical volatility, Vanguard Target Retirement is 2.42 times less risky than Guidemark(r) Small/mid. It trades about 0.04 of its potential returns per unit of risk. Guidemark Smallmid Cap is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,076 in Guidemark Smallmid Cap on August 26, 2024 and sell it today you would earn a total of 198.00 from holding Guidemark Smallmid Cap or generate 9.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Target Retirement vs. Guidemark Smallmid Cap
Performance |
| Timeline |
| Vanguard Target Reti |
| Guidemark Smallmid Cap |
Vanguard Target and Guidemark(r) Small/mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Target and Guidemark(r) Small/mid
The main advantage of trading using opposite Vanguard Target and Guidemark(r) Small/mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Target position performs unexpectedly, Guidemark(r) Small/mid 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 Guidemark(r) Small/mid will offset losses from the drop in Guidemark(r) Small/mid's long position.| Vanguard Target vs. Vanguard Target Retirement | Vanguard Target vs. Vanguard Target Retirement | Vanguard Target vs. Vanguard Target Retirement | Vanguard Target vs. Vanguard Target Retirement |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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