Correlation Between Vanguard Strategic and Western Asset
Can any of the company-specific risk be diversified away by investing in both Vanguard Strategic and Western Asset 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 Western Asset 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 Western Asset Inflation, you can compare the effects of market volatilities on Vanguard Strategic and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Strategic and Western Asset.
Diversification Opportunities for Vanguard Strategic and Western Asset
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VANGUARD and Western is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Strategic Small Cap and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Inflation 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Inflation has no effect on the direction of Vanguard Strategic i.e., Vanguard Strategic and Western Asset go up and down completely randomly.
Pair Corralation between Vanguard Strategic and Western Asset
Assuming the 90 days horizon Vanguard Strategic Small Cap is expected to generate 5.61 times more return on investment than Western Asset. However, Vanguard Strategic is 5.61 times more volatile than Western Asset Inflation. It trades about 0.26 of its potential returns per unit of risk. Western Asset Inflation is currently generating about -0.08 per unit of risk. If you would invest 4,280 in Vanguard Strategic Small Cap on August 27, 2024 and sell it today you would earn a total of 354.00 from holding Vanguard Strategic Small Cap or generate 8.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Strategic Small Cap vs. Western Asset Inflation
Performance |
| Timeline |
| Vanguard Strategic |
| Western Asset Inflation |
Vanguard Strategic and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Strategic and Western Asset
The main advantage of trading using opposite Vanguard Strategic and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Strategic position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset'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 |
| Western Asset vs. Omni Small Cap Value | Western Asset vs. Materials Portfolio Fidelity | Western Asset vs. Vanguard Strategic Small Cap | Western Asset vs. Ab E Opportunities |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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