Correlation Between Vanguard and Vanguard International
Can any of the company-specific risk be diversified away by investing in both Vanguard 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 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 Sp 500 and Vanguard International Growth, you can compare the effects of market volatilities on Vanguard 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 with a short position of Vanguard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and Vanguard International.
Diversification Opportunities for Vanguard and Vanguard International
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and Vanguard is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Sp 500 and Vanguard International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard International 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 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 i.e., Vanguard and Vanguard International go up and down completely randomly.
Pair Corralation between Vanguard and Vanguard International
Assuming the 90 days horizon Vanguard Sp 500 is expected to generate 0.91 times more return on investment than Vanguard International. However, Vanguard Sp 500 is 1.1 times less risky than Vanguard International. It trades about 0.11 of its potential returns per unit of risk. Vanguard International Growth is currently generating about 0.05 per unit of risk. If you would invest 49,063 in Vanguard Sp 500 on August 30, 2024 and sell it today you would earn a total of 32,916 from holding Vanguard Sp 500 or generate 67.09% 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. Vanguard International Growth
Performance |
| Timeline |
| Vanguard Sp 500 |
| Vanguard International |
Vanguard and Vanguard International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and Vanguard International
The main advantage of trading using opposite Vanguard and Vanguard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 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 vs. Teachers Insurance And | Vanguard vs. Fidelity Advisor Real | Vanguard vs. Msif Real Estate | Vanguard vs. Morgan Stanley Institutional |
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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