Correlation Between Vanguard and SWP Growth
Can any of the company-specific risk be diversified away by investing in both Vanguard and SWP Growth 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 and SWP Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard SP 500 and SWP Growth Income, you can compare the effects of market volatilities on Vanguard and SWP Growth 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 with a short position of SWP Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and SWP Growth.
Diversification Opportunities for Vanguard and SWP Growth
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and SWP is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 and SWP Growth Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWP Growth Income and Vanguard 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 SP 500 are associated (or correlated) with SWP Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWP Growth Income has no effect on the direction of Vanguard i.e., Vanguard and SWP Growth go up and down completely randomly.
Pair Corralation between Vanguard and SWP Growth
Considering the 90-day investment horizon Vanguard SP 500 is expected to generate 0.96 times more return on investment than SWP Growth. However, Vanguard SP 500 is 1.05 times less risky than SWP Growth. It trades about 0.11 of its potential returns per unit of risk. SWP Growth Income is currently generating about 0.02 per unit of risk. If you would invest 54,903 in Vanguard SP 500 on September 14, 2024 and sell it today you would earn a total of 662.00 from holding Vanguard SP 500 or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard SP 500 vs. SWP Growth Income
Performance |
| Timeline |
| Vanguard SP 500 |
| SWP Growth Income |
Vanguard and SWP Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and SWP Growth
The main advantage of trading using opposite Vanguard and SWP Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, SWP Growth 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 SWP Growth will offset losses from the drop in SWP Growth's long position.| Vanguard vs. Vanguard Total Stock | Vanguard vs. Vanguard High Dividend | Vanguard vs. Vanguard Information Technology | Vanguard vs. Invesco QQQ Trust |
| SWP Growth vs. Freedom Day Dividend | SWP Growth vs. Franklin Templeton ETF | SWP Growth vs. iShares MSCI China | SWP Growth vs. Tidal Trust II |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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