Correlation Between Vanguard Inflation and Real Return
Can any of the company-specific risk be diversified away by investing in both Vanguard Inflation and Real Return 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 Inflation and Real Return into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Inflation Protected Securities and Real Return Fund, you can compare the effects of market volatilities on Vanguard Inflation and Real Return 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 Inflation with a short position of Real Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Inflation and Real Return.
Diversification Opportunities for Vanguard Inflation and Real Return
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Real is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Inflation Protected S and Real Return Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Return Fund and Vanguard Inflation 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 Inflation Protected Securities are associated (or correlated) with Real Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Return Fund has no effect on the direction of Vanguard Inflation i.e., Vanguard Inflation and Real Return go up and down completely randomly.
Pair Corralation between Vanguard Inflation and Real Return
Assuming the 90 days horizon Vanguard Inflation Protected Securities is expected to generate about the same return on investment as Real Return Fund. But, Vanguard Inflation Protected Securities is 1.02 times less risky than Real Return. It trades about 0.07 of its potential returns per unit of risk. Real Return Fund is currently generating about 0.07 per unit of risk. If you would invest 944.00 in Real Return Fund on September 12, 2024 and sell it today you would earn a total of 71.00 from holding Real Return Fund or generate 7.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Inflation Protected S vs. Real Return Fund
Performance |
| Timeline |
| Vanguard Inflation |
| Real Return Fund |
Vanguard Inflation and Real Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Inflation and Real Return
The main advantage of trading using opposite Vanguard Inflation and Real Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Inflation position performs unexpectedly, Real Return 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 Return will offset losses from the drop in Real Return's long position.| Vanguard Inflation vs. Vanguard Short Term Investment Grade | Vanguard Inflation vs. Vanguard High Yield Porate | Vanguard Inflation vs. Vanguard Gnma Fund | Vanguard Inflation vs. Vanguard Reit Index |
| Real Return vs. Vanguard Inflation Protected Securities | Real Return vs. Vanguard Inflation Protected Securities | Real Return vs. American Funds Inflation | Real Return vs. American Funds Inflation |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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