Correlation Between Vanguard Strategic and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Vanguard Strategic and Dow Jones 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 Strategic and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Strategic Small Cap and Dow Jones Industrial, you can compare the effects of market volatilities on Vanguard Strategic and Dow Jones 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 Strategic with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Strategic and Dow Jones.
Diversification Opportunities for Vanguard Strategic and Dow Jones
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Dow is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Strategic Small Cap and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Vanguard Strategic 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 Strategic Small Cap are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Vanguard Strategic i.e., Vanguard Strategic and Dow Jones go up and down completely randomly.
Pair Corralation between Vanguard Strategic and Dow Jones
Assuming the 90 days horizon Vanguard Strategic Small Cap is expected to generate 1.58 times more return on investment than Dow Jones. However, Vanguard Strategic is 1.58 times more volatile than Dow Jones Industrial. It trades about 0.34 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 per unit of risk. If you would invest 4,220 in Vanguard Strategic Small Cap on September 1, 2024 and sell it today you would earn a total of 466.00 from holding Vanguard Strategic Small Cap or generate 11.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Strategic Small Cap vs. Dow Jones Industrial
Performance |
| Timeline |
Vanguard Strategic and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Vanguard Strategic Small Cap
Pair trading matchups for Vanguard Strategic
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Vanguard Strategic and Dow Jones
The main advantage of trading using opposite Vanguard Strategic and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Strategic position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Vanguard Strategic vs. Vanguard Explorer Value | Vanguard Strategic vs. Vanguard Strategic Equity | Vanguard Strategic vs. Vanguard Diversified Equity | Vanguard Strategic vs. Vanguard Mid Cap |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |