Correlation Between Vanguard Target and Commodity Return
Can any of the company-specific risk be diversified away by investing in both Vanguard Target and Commodity Return 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 Target and Commodity Return into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Target Retirement and Commodity Return Strategy, you can compare the effects of market volatilities on Vanguard Target and Commodity Return 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 Target with a short position of Commodity Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Target and Commodity Return.
Diversification Opportunities for Vanguard Target and Commodity Return
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Commodity is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Target Retirement and Commodity Return Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commodity Return Strategy and Vanguard Target 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 Target Retirement are associated (or correlated) with Commodity Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commodity Return Strategy has no effect on the direction of Vanguard Target i.e., Vanguard Target and Commodity Return go up and down completely randomly.
Pair Corralation between Vanguard Target and Commodity Return
Assuming the 90 days horizon Vanguard Target Retirement is expected to generate 0.72 times more return on investment than Commodity Return. However, Vanguard Target Retirement is 1.39 times less risky than Commodity Return. It trades about 0.07 of its potential returns per unit of risk. Commodity Return Strategy is currently generating about -0.01 per unit of risk. If you would invest 2,442 in Vanguard Target Retirement on August 29, 2024 and sell it today you would earn a total of 491.00 from holding Vanguard Target Retirement or generate 20.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Target Retirement vs. Commodity Return Strategy
Performance |
| Timeline |
| Vanguard Target Reti |
| Commodity Return Strategy |
Vanguard Target and Commodity Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Target and Commodity Return
The main advantage of trading using opposite Vanguard Target and Commodity Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Target position performs unexpectedly, Commodity Return 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 Commodity Return will offset losses from the drop in Commodity Return's long position.| Vanguard Target vs. Vanguard Target Retirement | Vanguard Target vs. Vanguard Target Retirement | Vanguard Target vs. Vanguard Target Retirement | Vanguard Target vs. Vanguard Target Retirement |
| Commodity Return vs. Us Government Securities | Commodity Return vs. Dreyfus Government Cash | Commodity Return vs. Fidelity Series Government | Commodity Return vs. Government Securities Fund |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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