Correlation Between Vanguard Total and Amer Beacon
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Amer Beacon 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 Amer Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Bond and Amer Beacon Garcia, you can compare the effects of market volatilities on Vanguard Total and Amer Beacon 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 Amer Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Amer Beacon.
Diversification Opportunities for Vanguard Total and Amer Beacon
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Amer is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and Amer Beacon Garcia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amer Beacon Garcia 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 Bond are associated (or correlated) with Amer Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amer Beacon Garcia has no effect on the direction of Vanguard Total i.e., Vanguard Total and Amer Beacon go up and down completely randomly.
Pair Corralation between Vanguard Total and Amer Beacon
Assuming the 90 days horizon Vanguard Total is expected to generate 1.03 times less return on investment than Amer Beacon. But when comparing it to its historical volatility, Vanguard Total Bond is 1.36 times less risky than Amer Beacon. It trades about 0.08 of its potential returns per unit of risk. Amer Beacon Garcia is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 780.00 in Amer Beacon Garcia on August 25, 2024 and sell it today you would earn a total of 71.00 from holding Amer Beacon Garcia or generate 9.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Bond vs. Amer Beacon Garcia
Performance |
| Timeline |
| Vanguard Total Bond |
| Amer Beacon Garcia |
Vanguard Total and Amer Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Amer Beacon
The main advantage of trading using opposite Vanguard Total and Amer Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Amer Beacon 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 Amer Beacon will offset losses from the drop in Amer Beacon's long position.| Vanguard Total vs. Invesco Technology Fund | Vanguard Total vs. Pgim Jennison Technology | Vanguard Total vs. Icon Information Technology | Vanguard Total vs. Janus Global Technology |
| Amer Beacon vs. Vanguard Total Bond | Amer Beacon vs. Vanguard Total Bond | Amer Beacon vs. Vanguard Total Bond | Amer Beacon vs. Vanguard Total Bond |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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