Correlation Between Vanguard Market and Vanguard International
Can any of the company-specific risk be diversified away by investing in both Vanguard Market and Vanguard International 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 Market and Vanguard International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Market Neutral and Vanguard International Dividend, you can compare the effects of market volatilities on Vanguard Market and Vanguard International 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 Market with a short position of Vanguard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Market and Vanguard International.
Diversification Opportunities for Vanguard Market and Vanguard International
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Vanguard is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Market Neutral and Vanguard International Dividen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard International and Vanguard Market 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 Market Neutral are associated (or correlated) with Vanguard International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard International has no effect on the direction of Vanguard Market i.e., Vanguard Market and Vanguard International go up and down completely randomly.
Pair Corralation between Vanguard Market and Vanguard International
Assuming the 90 days horizon Vanguard Market is expected to generate 2.23 times less return on investment than Vanguard International. But when comparing it to its historical volatility, Vanguard Market Neutral is 2.04 times less risky than Vanguard International. It trades about 0.03 of its potential returns per unit of risk. Vanguard International Dividend is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,902 in Vanguard International Dividend on August 29, 2024 and sell it today you would earn a total of 133.00 from holding Vanguard International Dividend or generate 3.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Market Neutral vs. Vanguard International Dividen
Performance |
| Timeline |
| Vanguard Market Neutral |
| Vanguard International |
Vanguard Market and Vanguard International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Market and Vanguard International
The main advantage of trading using opposite Vanguard Market and Vanguard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Market position performs unexpectedly, Vanguard International 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 Vanguard International will offset losses from the drop in Vanguard International's long position.| Vanguard Market vs. HUMANA INC | Vanguard Market vs. Aquagold International | Vanguard Market vs. Barloworld Ltd ADR | Vanguard Market vs. Morningstar Unconstrained Allocation |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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