Correlation Between Vanguard Total and Cref Inflation-linked
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Cref Inflation-linked 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 Cref Inflation-linked 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 Cref Inflation Linked Bond, you can compare the effects of market volatilities on Vanguard Total and Cref Inflation-linked 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 Cref Inflation-linked. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Cref Inflation-linked.
Diversification Opportunities for Vanguard Total and Cref Inflation-linked
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Cref is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Cref Inflation Linked Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cref Inflation Linked 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 Cref Inflation-linked. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cref Inflation Linked has no effect on the direction of Vanguard Total i.e., Vanguard Total and Cref Inflation-linked go up and down completely randomly.
Pair Corralation between Vanguard Total and Cref Inflation-linked
Assuming the 90 days horizon Vanguard Total Stock is expected to generate 3.87 times more return on investment than Cref Inflation-linked. However, Vanguard Total is 3.87 times more volatile than Cref Inflation Linked Bond. It trades about 0.21 of its potential returns per unit of risk. Cref Inflation Linked Bond is currently generating about 0.02 per unit of risk. If you would invest 13,216 in Vanguard Total Stock on September 2, 2024 and sell it today you would earn a total of 1,373 from holding Vanguard Total Stock or generate 10.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Stock vs. Cref Inflation Linked Bond
Performance |
| Timeline |
| Vanguard Total Stock |
| Cref Inflation Linked |
Vanguard Total and Cref Inflation-linked Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Cref Inflation-linked
The main advantage of trading using opposite Vanguard Total and Cref Inflation-linked positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Cref Inflation-linked 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 Cref Inflation-linked will offset losses from the drop in Cref Inflation-linked's 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 |
| Cref Inflation-linked vs. Vanguard Total Stock | Cref Inflation-linked vs. Vanguard 500 Index | Cref Inflation-linked vs. Vanguard Total Stock | Cref Inflation-linked vs. Vanguard Total Stock |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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