Correlation Between Vanguard Star and American Funds
Can any of the company-specific risk be diversified away by investing in both Vanguard Star and American Funds 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 American Funds 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 American Funds 2010, you can compare the effects of market volatilities on Vanguard Star and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Star and American Funds.
Diversification Opportunities for Vanguard Star and American Funds
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VANGUARD and American is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Star Fund and American Funds 2010 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2010 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2010 has no effect on the direction of Vanguard Star i.e., Vanguard Star and American Funds go up and down completely randomly.
Pair Corralation between Vanguard Star and American Funds
Assuming the 90 days horizon Vanguard Star Fund is expected to generate 1.59 times more return on investment than American Funds. However, Vanguard Star is 1.59 times more volatile than American Funds 2010. It trades about 0.31 of its potential returns per unit of risk. American Funds 2010 is currently generating about 0.26 per unit of risk. If you would invest 2,907 in Vanguard Star Fund on September 5, 2024 and sell it today you would earn a total of 86.00 from holding Vanguard Star Fund or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Star Fund vs. American Funds 2010
Performance |
| Timeline |
| Vanguard Star |
| American Funds 2010 |
Vanguard Star and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Star and American Funds
The main advantage of trading using opposite Vanguard Star and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Star position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' 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 |
| American Funds vs. Vanguard Star Fund | American Funds vs. Nuveen High Income | American Funds vs. Goldman Sachs High | American Funds vs. Ab Global Risk |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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