Correlation Between Vanguard Strategic and New Perspective
Can any of the company-specific risk be diversified away by investing in both Vanguard Strategic and New Perspective 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 New Perspective 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 New Perspective Fund, you can compare the effects of market volatilities on Vanguard Strategic and New Perspective 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 New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Strategic and New Perspective.
Diversification Opportunities for Vanguard Strategic and New Perspective
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VANGUARD and New is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Strategic Small Cap and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective 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 New Perspective. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Perspective has no effect on the direction of Vanguard Strategic i.e., Vanguard Strategic and New Perspective go up and down completely randomly.
Pair Corralation between Vanguard Strategic and New Perspective
Assuming the 90 days horizon Vanguard Strategic Small Cap is expected to generate 1.53 times more return on investment than New Perspective. However, Vanguard Strategic is 1.53 times more volatile than New Perspective Fund. It trades about 0.09 of its potential returns per unit of risk. New Perspective Fund is currently generating about 0.08 per unit of risk. If you would invest 3,025 in Vanguard Strategic Small Cap on August 26, 2024 and sell it today you would earn a total of 1,609 from holding Vanguard Strategic Small Cap or generate 53.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Strategic Small Cap vs. New Perspective Fund
Performance |
| Timeline |
| Vanguard Strategic |
| New Perspective |
Vanguard Strategic and New Perspective Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Strategic and New Perspective
The main advantage of trading using opposite Vanguard Strategic and New Perspective positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Strategic position performs unexpectedly, New Perspective 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 Perspective will offset losses from the drop in New Perspective's 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 |
| New Perspective vs. Auer Growth Fund | New Perspective vs. Vanguard Strategic Small Cap | New Perspective vs. Delaware Limited Term Diversified | New Perspective vs. Materials Portfolio Fidelity |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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