Correlation Between Vanguard and New Alternatives
Can any of the company-specific risk be diversified away by investing in both Vanguard and New Alternatives 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 New Alternatives into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Sp Small Cap and New Alternatives Fund, you can compare the effects of market volatilities on Vanguard and New Alternatives 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 New Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and New Alternatives.
Diversification Opportunities for Vanguard and New Alternatives
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and New is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Sp Small Cap and New Alternatives Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Alternatives 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 Small Cap are associated (or correlated) with New Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Alternatives has no effect on the direction of Vanguard i.e., Vanguard and New Alternatives go up and down completely randomly.
Pair Corralation between Vanguard and New Alternatives
Assuming the 90 days horizon Vanguard Sp Small Cap is expected to generate 1.19 times more return on investment than New Alternatives. However, Vanguard is 1.19 times more volatile than New Alternatives Fund. It trades about 0.06 of its potential returns per unit of risk. New Alternatives Fund is currently generating about -0.01 per unit of risk. If you would invest 31,303 in Vanguard Sp Small Cap on August 30, 2024 and sell it today you would earn a total of 10,798 from holding Vanguard Sp Small Cap or generate 34.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Vanguard Sp Small Cap vs. New Alternatives Fund
Performance |
Timeline |
Vanguard Sp Small |
New Alternatives |
Vanguard and New Alternatives Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard and New Alternatives
The main advantage of trading using opposite Vanguard and New Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, New Alternatives 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 New Alternatives will offset losses from the drop in New Alternatives' long position.Vanguard vs. Maryland Tax Free Bond | Vanguard vs. Icon Bond Fund | Vanguard vs. Rbc Ultra Short Fixed | Vanguard vs. Artisan High Income |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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