Correlation Between Vanguard Total and Aggressive Investors
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Aggressive Investors 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 Total and Aggressive Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Stock and Aggressive Investors 1, you can compare the effects of market volatilities on Vanguard Total and Aggressive Investors 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 Total with a short position of Aggressive Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Aggressive Investors.
Diversification Opportunities for Vanguard Total and Aggressive Investors
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Aggressive is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Aggressive Investors 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive Investors and Vanguard Total 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 Total Stock are associated (or correlated) with Aggressive Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Investors has no effect on the direction of Vanguard Total i.e., Vanguard Total and Aggressive Investors go up and down completely randomly.
Pair Corralation between Vanguard Total and Aggressive Investors
Assuming the 90 days horizon Vanguard Total Stock is expected to under-perform the Aggressive Investors. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard Total Stock is 1.54 times less risky than Aggressive Investors. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Aggressive Investors 1 is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 9,985 in Aggressive Investors 1 on November 27, 2024 and sell it today you would lose (49.00) from holding Aggressive Investors 1 or give up 0.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Stock vs. Aggressive Investors 1
Performance |
| Timeline |
| Vanguard Total Stock |
| Aggressive Investors |
Vanguard Total and Aggressive Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Aggressive Investors
The main advantage of trading using opposite Vanguard Total and Aggressive Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Aggressive Investors 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 Aggressive Investors will offset losses from the drop in Aggressive Investors' long position.| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Bond | Vanguard Total vs. Vanguard Small Cap Index | Vanguard Total vs. Vanguard Reit Index |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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