Correlation Between Vanguard Index and Vanguard International
Can any of the company-specific risk be diversified away by investing in both Vanguard Index and Vanguard International 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 Index and Vanguard International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Index Funds and Vanguard International Equity, you can compare the effects of market volatilities on Vanguard Index and Vanguard International 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 Index with a short position of Vanguard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Index and Vanguard International.
Diversification Opportunities for Vanguard Index and Vanguard International
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vanguard and Vanguard is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Index Funds and Vanguard International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard International and Vanguard Index 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 Index Funds are associated (or correlated) with Vanguard International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard International has no effect on the direction of Vanguard Index i.e., Vanguard Index and Vanguard International go up and down completely randomly.
Pair Corralation between Vanguard Index and Vanguard International
Assuming the 90 days trading horizon Vanguard Index Funds is expected to generate 0.77 times more return on investment than Vanguard International. However, Vanguard Index Funds is 1.29 times less risky than Vanguard International. It trades about 0.01 of its potential returns per unit of risk. Vanguard International Equity is currently generating about -0.06 per unit of risk. If you would invest 605,174 in Vanguard Index Funds on September 12, 2024 and sell it today you would earn a total of 991.00 from holding Vanguard Index Funds or generate 0.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard Index Funds vs. Vanguard International Equity
Performance |
| Timeline |
| Vanguard Index Funds |
| Vanguard International |
Vanguard Index and Vanguard International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Index and Vanguard International
The main advantage of trading using opposite Vanguard Index and Vanguard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Index position performs unexpectedly, Vanguard International 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 International will offset losses from the drop in Vanguard International's long position.| Vanguard Index vs. Vanguard Funds Public | Vanguard Index vs. Vanguard Specialized Funds | Vanguard Index vs. Vanguard World | Vanguard Index vs. Vanguard Index Funds |
| Vanguard International vs. Vanguard Index Funds | Vanguard International vs. Vanguard Index Funds | Vanguard International vs. Vanguard STAR Funds | Vanguard International vs. SPDR SP 500 |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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