Correlation Between Vanguard Total and Vanguard High
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Vanguard High 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 Total and Vanguard High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total International and Vanguard High Yield Corporate, you can compare the effects of market volatilities on Vanguard Total and Vanguard High 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 Total with a short position of Vanguard High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Vanguard High.
Diversification Opportunities for Vanguard Total and Vanguard High
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Vanguard is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total International and Vanguard High Yield Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard High Yield and Vanguard Total 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 Total International are associated (or correlated) with Vanguard High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard High Yield has no effect on the direction of Vanguard Total i.e., Vanguard Total and Vanguard High go up and down completely randomly.
Pair Corralation between Vanguard Total and Vanguard High
Assuming the 90 days horizon Vanguard Total is expected to generate 1.41 times less return on investment than Vanguard High. In addition to that, Vanguard Total is 1.11 times more volatile than Vanguard High Yield Corporate. It trades about 0.11 of its total potential returns per unit of risk. Vanguard High Yield Corporate is currently generating about 0.17 per unit of volatility. If you would invest 498.00 in Vanguard High Yield Corporate on August 26, 2024 and sell it today you would earn a total of 48.00 from holding Vanguard High Yield Corporate or generate 9.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total International vs. Vanguard High Yield Corporate
Performance |
| Timeline |
| Vanguard Total Inter |
| Vanguard High Yield |
Vanguard Total and Vanguard High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Vanguard High
The main advantage of trading using opposite Vanguard Total and Vanguard High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Vanguard High 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 High will offset losses from the drop in Vanguard High's long position.The idea behind Vanguard Total International and Vanguard High Yield Corporate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |