Correlation Between Vanguard Total and Western Assets
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Western Assets 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 Western Assets 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 Western Assets Emerging, you can compare the effects of market volatilities on Vanguard Total and Western Assets 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 Western Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Western Assets.
Diversification Opportunities for Vanguard Total and Western Assets
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vanguard and Western is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Western Assets Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Assets Emerging 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 Western Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Assets Emerging has no effect on the direction of Vanguard Total i.e., Vanguard Total and Western Assets go up and down completely randomly.
Pair Corralation between Vanguard Total and Western Assets
Assuming the 90 days horizon Vanguard Total Stock is expected to generate 2.34 times more return on investment than Western Assets. However, Vanguard Total is 2.34 times more volatile than Western Assets Emerging. It trades about 0.2 of its potential returns per unit of risk. Western Assets Emerging is currently generating about 0.03 per unit of risk. If you would invest 13,948 in Vanguard Total Stock on August 28, 2024 and sell it today you would earn a total of 548.00 from holding Vanguard Total Stock or generate 3.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard Total Stock vs. Western Assets Emerging
Performance |
| Timeline |
| Vanguard Total Stock |
| Western Assets Emerging |
Vanguard Total and Western Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Western Assets
The main advantage of trading using opposite Vanguard Total and Western Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Western Assets 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 Western Assets will offset losses from the drop in Western Assets' long position.| Vanguard Total vs. Short Oil Gas | Vanguard Total vs. Firsthand Alternative Energy | Vanguard Total vs. Clearbridge Energy Mlp | Vanguard Total vs. Calvert Global Energy |
| Western Assets vs. Federated Mdt Large | Western Assets vs. Knights Of Umbus | Western Assets vs. Goldman Sachs Large | Western Assets vs. Qs Large Cap |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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