Correlation Between Vanguard Total and Stock Index
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Stock Index 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 Stock Index 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 Stock Index Fund, you can compare the effects of market volatilities on Vanguard Total and Stock Index 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 Stock Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Stock Index.
Diversification Opportunities for Vanguard Total and Stock Index
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Stock is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Stock Index Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stock Index 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 Stock Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stock Index Fund has no effect on the direction of Vanguard Total i.e., Vanguard Total and Stock Index go up and down completely randomly.
Pair Corralation between Vanguard Total and Stock Index
Assuming the 90 days horizon Vanguard Total Stock is expected to generate 1.02 times more return on investment than Stock Index. However, Vanguard Total is 1.02 times more volatile than Stock Index Fund. It trades about 0.13 of its potential returns per unit of risk. Stock Index Fund is currently generating about 0.12 per unit of risk. If you would invest 13,173 in Vanguard Total Stock on November 2, 2024 and sell it today you would earn a total of 1,440 from holding Vanguard Total Stock or generate 10.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Stock vs. Stock Index Fund
Performance |
| Timeline |
| Vanguard Total Stock |
| Stock Index Fund |
Vanguard Total and Stock Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Stock Index
The main advantage of trading using opposite Vanguard Total and Stock Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Stock Index 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 Stock Index will offset losses from the drop in Stock Index'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 |
| Stock Index vs. Mid Cap Index | Stock Index vs. Valic Company I | Stock Index vs. Mid Cap Strategic | Stock Index vs. Valic Company I |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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