Correlation Between Vanguard Star and Multi Index
Can any of the company-specific risk be diversified away by investing in both Vanguard Star and Multi Index 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 Star and Multi Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Star Fund and Multi Index 2040 Lifetime, you can compare the effects of market volatilities on Vanguard Star and Multi Index 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 Star with a short position of Multi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Star and Multi Index.
Diversification Opportunities for Vanguard Star and Multi Index
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Multi is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Star Fund and Multi Index 2040 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2040 and Vanguard Star 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 Star Fund are associated (or correlated) with Multi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2040 has no effect on the direction of Vanguard Star i.e., Vanguard Star and Multi Index go up and down completely randomly.
Pair Corralation between Vanguard Star and Multi Index
Assuming the 90 days horizon Vanguard Star is expected to generate 1.35 times less return on investment than Multi Index. But when comparing it to its historical volatility, Vanguard Star Fund is 1.02 times less risky than Multi Index. It trades about 0.05 of its potential returns per unit of risk. Multi Index 2040 Lifetime is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,438 in Multi Index 2040 Lifetime on September 12, 2024 and sell it today you would earn a total of 9.00 from holding Multi Index 2040 Lifetime or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard Star Fund vs. Multi Index 2040 Lifetime
Performance |
| Timeline |
| Vanguard Star |
| Multi Index 2040 |
Vanguard Star and Multi Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Star and Multi Index
The main advantage of trading using opposite Vanguard Star and Multi Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Star position performs unexpectedly, Multi Index 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 Multi Index will offset losses from the drop in Multi Index's long position.| Vanguard Star vs. Vanguard Wellington Fund | Vanguard Star vs. Vanguard Wellesley Income | Vanguard Star vs. Vanguard Windsor Ii | Vanguard Star vs. Vanguard Health Care |
| Multi Index vs. Sa Real Estate | Multi Index vs. Nuveen Real Estate | Multi Index vs. Forum Real Estate | Multi Index vs. Jhancock Real Estate |
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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