Correlation Between Vanguard Reit and Real Estate
Can any of the company-specific risk be diversified away by investing in both Vanguard Reit and Real Estate 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 Reit and Real Estate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Reit Index and Real Estate Fund, you can compare the effects of market volatilities on Vanguard Reit and Real Estate 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 Reit with a short position of Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Reit and Real Estate.
Diversification Opportunities for Vanguard Reit and Real Estate
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Real is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Reit Index and Real Estate Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Fund and Vanguard Reit 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 Reit Index are associated (or correlated) with Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Fund has no effect on the direction of Vanguard Reit i.e., Vanguard Reit and Real Estate go up and down completely randomly.
Pair Corralation between Vanguard Reit and Real Estate
Assuming the 90 days horizon Vanguard Reit Index is expected to generate 0.97 times more return on investment than Real Estate. However, Vanguard Reit Index is 1.03 times less risky than Real Estate. It trades about 0.06 of its potential returns per unit of risk. Real Estate Fund is currently generating about 0.06 per unit of risk. If you would invest 1,703 in Vanguard Reit Index on September 4, 2024 and sell it today you would earn a total of 448.00 from holding Vanguard Reit Index or generate 26.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Vanguard Reit Index vs. Real Estate Fund
Performance |
| Timeline |
| Vanguard Reit Index |
| Real Estate Fund |
Vanguard Reit and Real Estate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Reit and Real Estate
The main advantage of trading using opposite Vanguard Reit and Real Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Reit position performs unexpectedly, Real Estate 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 Real Estate will offset losses from the drop in Real Estate's long position.| Vanguard Reit vs. Amg Managers Centersquare | Vanguard Reit vs. Guggenheim Risk Managed | Vanguard Reit vs. Deutsche Real Estate | Vanguard Reit vs. Nuveen Real Estate |
| Real Estate vs. Utilities Fund Investor | Real Estate vs. Health Care Fund | Real Estate vs. Transportation Fund Investor | Real Estate vs. Financial Services Fund |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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