Correlation Between Vanguard Extended and Amg River
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and Amg River 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 Extended and Amg River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Market and Amg River Road, you can compare the effects of market volatilities on Vanguard Extended and Amg River 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 Extended with a short position of Amg River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Amg River.
Diversification Opportunities for Vanguard Extended and Amg River
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Amg is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Amg River Road in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg River Road and Vanguard Extended 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 Extended Market are associated (or correlated) with Amg River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg River Road has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Amg River go up and down completely randomly.
Pair Corralation between Vanguard Extended and Amg River
Assuming the 90 days horizon Vanguard Extended Market is expected to generate 1.57 times more return on investment than Amg River. However, Vanguard Extended is 1.57 times more volatile than Amg River Road. It trades about 0.36 of its potential returns per unit of risk. Amg River Road is currently generating about 0.31 per unit of risk. If you would invest 22,634 in Vanguard Extended Market on August 28, 2024 and sell it today you would earn a total of 2,477 from holding Vanguard Extended Market or generate 10.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Extended Market vs. Amg River Road
Performance |
| Timeline |
| Vanguard Extended Market |
| Amg River Road |
Vanguard Extended and Amg River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and Amg River
The main advantage of trading using opposite Vanguard Extended and Amg River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, Amg River 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 Amg River will offset losses from the drop in Amg River's long position.| Vanguard Extended vs. Vanguard Small Cap Index | Vanguard Extended vs. Vanguard 500 Index | Vanguard Extended vs. Vanguard Growth Index | Vanguard Extended vs. Vanguard Total International |
| Amg River vs. Amg Southernsun Small | Amg River vs. Cambiar International Equity | Amg River vs. Astoncrosswind Small Cap | Amg River vs. Hodges Small Cap |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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