Correlation Between Vanguard Total and Akre Focus
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Akre Focus 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 Akre Focus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Stock and Akre Focus Fund, you can compare the effects of market volatilities on Vanguard Total and Akre Focus 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 Akre Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Akre Focus.
Diversification Opportunities for Vanguard Total and Akre Focus
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and AKRE is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Akre Focus Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akre Focus Fund 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 Stock are associated (or correlated) with Akre Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akre Focus Fund has no effect on the direction of Vanguard Total i.e., Vanguard Total and Akre Focus go up and down completely randomly.
Pair Corralation between Vanguard Total and Akre Focus
Assuming the 90 days horizon Vanguard Total is expected to generate 1.2 times less return on investment than Akre Focus. In addition to that, Vanguard Total is 1.12 times more volatile than Akre Focus Fund. It trades about 0.22 of its total potential returns per unit of risk. Akre Focus Fund is currently generating about 0.29 per unit of volatility. If you would invest 7,134 in Akre Focus Fund on August 29, 2024 and sell it today you would earn a total of 380.00 from holding Akre Focus Fund or generate 5.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Stock vs. Akre Focus Fund
Performance |
| Timeline |
| Vanguard Total Stock |
| Akre Focus Fund |
Vanguard Total and Akre Focus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Akre Focus
The main advantage of trading using opposite Vanguard Total and Akre Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Akre Focus 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 Akre Focus will offset losses from the drop in Akre Focus' long position.| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Bond | Vanguard Total vs. Vanguard 500 Index | Vanguard Total vs. Vanguard Reit Index |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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