Correlation Between Vanguard Target and Vanguard Lifestrategy
Can any of the company-specific risk be diversified away by investing in both Vanguard Target and Vanguard Lifestrategy 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 Target and Vanguard Lifestrategy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Target Retirement and Vanguard Lifestrategy Income, you can compare the effects of market volatilities on Vanguard Target and Vanguard Lifestrategy 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 Target with a short position of Vanguard Lifestrategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Target and Vanguard Lifestrategy.
Diversification Opportunities for Vanguard Target and Vanguard Lifestrategy
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Vanguard is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Target Retirement and Vanguard Lifestrategy Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Lifestrategy and Vanguard Target 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 Target Retirement are associated (or correlated) with Vanguard Lifestrategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Lifestrategy has no effect on the direction of Vanguard Target i.e., Vanguard Target and Vanguard Lifestrategy go up and down completely randomly.
Pair Corralation between Vanguard Target and Vanguard Lifestrategy
Assuming the 90 days horizon Vanguard Target Retirement is expected to generate 0.98 times more return on investment than Vanguard Lifestrategy. However, Vanguard Target Retirement is 1.02 times less risky than Vanguard Lifestrategy. It trades about 0.09 of its potential returns per unit of risk. Vanguard Lifestrategy Income is currently generating about 0.07 per unit of risk. If you would invest 1,174 in Vanguard Target Retirement on August 27, 2024 and sell it today you would earn a total of 195.00 from holding Vanguard Target Retirement or generate 16.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Target Retirement vs. Vanguard Lifestrategy Income
Performance |
| Timeline |
| Vanguard Target Reti |
| Vanguard Lifestrategy |
Vanguard Target and Vanguard Lifestrategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Target and Vanguard Lifestrategy
The main advantage of trading using opposite Vanguard Target and Vanguard Lifestrategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Target position performs unexpectedly, Vanguard Lifestrategy 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 Lifestrategy will offset losses from the drop in Vanguard Lifestrategy's long position.| Vanguard Target vs. Vanguard Materials Index | Vanguard Target vs. Vanguard Limited Term Tax Exempt | Vanguard Target vs. Vanguard Limited Term Tax Exempt | Vanguard Target vs. Vanguard Global Minimum |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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