Correlation Between Vanguard Global and New Economy
Can any of the company-specific risk be diversified away by investing in both Vanguard Global and New Economy 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 Global and New Economy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Global Credit and New Economy Fund, you can compare the effects of market volatilities on Vanguard Global and New Economy 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 Global with a short position of New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Global and New Economy.
Diversification Opportunities for Vanguard Global and New Economy
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and New is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Global Credit and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund and Vanguard Global 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 Global Credit are associated (or correlated) with New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Vanguard Global i.e., Vanguard Global and New Economy go up and down completely randomly.
Pair Corralation between Vanguard Global and New Economy
Assuming the 90 days horizon Vanguard Global is expected to generate 1.1 times less return on investment than New Economy. But when comparing it to its historical volatility, Vanguard Global Credit is 3.74 times less risky than New Economy. It trades about 0.13 of its potential returns per unit of risk. New Economy Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5,779 in New Economy Fund on August 30, 2024 and sell it today you would earn a total of 41.00 from holding New Economy Fund or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Global Credit vs. New Economy Fund
Performance |
| Timeline |
| Vanguard Global Credit |
| New Economy Fund |
Vanguard Global and New Economy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Global and New Economy
The main advantage of trading using opposite Vanguard Global and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Global position performs unexpectedly, New Economy 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 New Economy will offset losses from the drop in New Economy's long position.| Vanguard Global vs. Calvert High Yield | Vanguard Global vs. T Rowe Price | Vanguard Global vs. Siit High Yield | Vanguard Global vs. Multimanager Lifestyle Aggressive |
| New Economy vs. Calamos Dynamic Convertible | New Economy vs. Versatile Bond Portfolio | New Economy vs. Ms Global Fixed | New Economy vs. Ultra Short Fixed Income |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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