Correlation Between Vanguard Developed and American High
Can any of the company-specific risk be diversified away by investing in both Vanguard Developed and American 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 Developed and American High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Developed Markets and American High Income, you can compare the effects of market volatilities on Vanguard Developed and American 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 Developed with a short position of American High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Developed and American High.
Diversification Opportunities for Vanguard Developed and American High
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and AMERICAN is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Developed Markets and American High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American High Income and Vanguard Developed 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 Developed Markets are associated (or correlated) with American High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American High Income has no effect on the direction of Vanguard Developed i.e., Vanguard Developed and American High go up and down completely randomly.
Pair Corralation between Vanguard Developed and American High
Assuming the 90 days horizon Vanguard Developed Markets is expected to generate 2.85 times more return on investment than American High. However, Vanguard Developed is 2.85 times more volatile than American High Income. It trades about 0.05 of its potential returns per unit of risk. American High Income is currently generating about 0.13 per unit of risk. If you would invest 1,322 in Vanguard Developed Markets on September 3, 2024 and sell it today you would earn a total of 294.00 from holding Vanguard Developed Markets or generate 22.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Developed Markets vs. American High Income
Performance |
| Timeline |
| Vanguard Developed |
| American High Income |
Vanguard Developed and American High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Developed and American High
The main advantage of trading using opposite Vanguard Developed and American High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Developed position performs unexpectedly, American 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 American High will offset losses from the drop in American High's long position.| Vanguard Developed vs. Vanguard Emerging Markets | Vanguard Developed vs. Vanguard Small Cap Index | Vanguard Developed vs. Vanguard Total Bond | Vanguard Developed vs. Vanguard Mid Cap Index |
| American High vs. Oklahoma College Savings | American High vs. Aqr Managed Futures | American High vs. Lord Abbett Inflation | American High vs. Aqr Managed Futures |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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