Correlation Between Vanguard Growth and Volatility Shares
Can any of the company-specific risk be diversified away by investing in both Vanguard Growth and Volatility Shares 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 Growth and Volatility Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Growth Index and Volatility Shares Trust, you can compare the effects of market volatilities on Vanguard Growth and Volatility Shares 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 Growth with a short position of Volatility Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and Volatility Shares.
Diversification Opportunities for Vanguard Growth and Volatility Shares
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Volatility is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and Volatility Shares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volatility Shares Trust and Vanguard Growth 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 Growth Index are associated (or correlated) with Volatility Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volatility Shares Trust has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and Volatility Shares go up and down completely randomly.
Pair Corralation between Vanguard Growth and Volatility Shares
Considering the 90-day investment horizon Vanguard Growth is expected to generate 6.02 times less return on investment than Volatility Shares. But when comparing it to its historical volatility, Vanguard Growth Index is 6.75 times less risky than Volatility Shares. It trades about 0.12 of its potential returns per unit of risk. Volatility Shares Trust is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,787 in Volatility Shares Trust on August 27, 2024 and sell it today you would earn a total of 4,631 from holding Volatility Shares Trust or generate 259.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Growth Index vs. Volatility Shares Trust
Performance |
| Timeline |
| Vanguard Growth Index |
| Volatility Shares Trust |
Vanguard Growth and Volatility Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Growth and Volatility Shares
The main advantage of trading using opposite Vanguard Growth and Volatility Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Growth position performs unexpectedly, Volatility Shares 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 Volatility Shares will offset losses from the drop in Volatility Shares' long position.| Vanguard Growth vs. Vanguard Value Index | Vanguard Growth vs. Vanguard Information Technology | Vanguard Growth vs. Vanguard Small Cap Growth | Vanguard Growth vs. Vanguard Dividend Appreciation |
| Volatility Shares vs. Grayscale Bitcoin Trust | Volatility Shares vs. Siren Nasdaq NexGen | Volatility Shares vs. Grayscale Bitcoin Mini | Volatility Shares vs. First Trust SkyBridge |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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