Correlation Between Vanguard Value and Vanguard High
Can any of the company-specific risk be diversified away by investing in both Vanguard Value and Vanguard 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 Value and Vanguard High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Value Index and Vanguard High Dividend, you can compare the effects of market volatilities on Vanguard Value and Vanguard 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 Value with a short position of Vanguard High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Value and Vanguard High.
Diversification Opportunities for Vanguard Value and Vanguard High
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Vanguard is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index and Vanguard High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard High Dividend and Vanguard Value 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 Value Index are associated (or correlated) with Vanguard High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard High Dividend has no effect on the direction of Vanguard Value i.e., Vanguard Value and Vanguard High go up and down completely randomly.
Pair Corralation between Vanguard Value and Vanguard High
Considering the 90-day investment horizon Vanguard Value is expected to generate 1.38 times less return on investment than Vanguard High. But when comparing it to its historical volatility, Vanguard Value Index is 1.03 times less risky than Vanguard High. It trades about 0.07 of its potential returns per unit of risk. Vanguard High Dividend is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 12,403 in Vanguard High Dividend on November 2, 2024 and sell it today you would earn a total of 898.00 from holding Vanguard High Dividend or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Value Index vs. Vanguard High Dividend
Performance |
| Timeline |
| Vanguard Value Index |
| Vanguard High Dividend |
Vanguard Value and Vanguard High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Value and Vanguard High
The main advantage of trading using opposite Vanguard Value and Vanguard High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Value position performs unexpectedly, Vanguard 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 Vanguard High will offset losses from the drop in Vanguard High's long position.| Vanguard Value vs. Vanguard Growth Index | Vanguard Value vs. Vanguard Small Cap Value | Vanguard Value vs. Vanguard Mid Cap Value | Vanguard Value vs. Vanguard Small Cap Index |
| Vanguard High vs. Vanguard Dividend Appreciation | Vanguard High vs. Schwab Dividend Equity | Vanguard High vs. Vanguard Real Estate | Vanguard High 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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