Correlation Between Vanguard Growth and Schwab Aggregate
Can any of the company-specific risk be diversified away by investing in both Vanguard Growth and Schwab Aggregate 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 Schwab Aggregate 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 Schwab Aggregate Bond, you can compare the effects of market volatilities on Vanguard Growth and Schwab Aggregate 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 Schwab Aggregate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and Schwab Aggregate.
Diversification Opportunities for Vanguard Growth and Schwab Aggregate
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Schwab is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and Schwab Aggregate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Aggregate Bond 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 Schwab Aggregate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Aggregate Bond has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and Schwab Aggregate go up and down completely randomly.
Pair Corralation between Vanguard Growth and Schwab Aggregate
Considering the 90-day investment horizon Vanguard Growth Index is expected to generate 3.58 times more return on investment than Schwab Aggregate. However, Vanguard Growth is 3.58 times more volatile than Schwab Aggregate Bond. It trades about 0.17 of its potential returns per unit of risk. Schwab Aggregate Bond is currently generating about -0.09 per unit of risk. If you would invest 38,806 in Vanguard Growth Index on August 24, 2024 and sell it today you would earn a total of 1,589 from holding Vanguard Growth Index or generate 4.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Growth Index vs. Schwab Aggregate Bond
Performance |
| Timeline |
| Vanguard Growth Index |
| Schwab Aggregate Bond |
Vanguard Growth and Schwab Aggregate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Growth and Schwab Aggregate
The main advantage of trading using opposite Vanguard Growth and Schwab Aggregate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Growth position performs unexpectedly, Schwab Aggregate 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 Schwab Aggregate will offset losses from the drop in Schwab Aggregate's 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 |
| Schwab Aggregate vs. Schwab International Equity | Schwab Aggregate vs. Schwab Emerging Markets | Schwab Aggregate vs. Schwab Short Term Treasury | Schwab Aggregate vs. Schwab TIPS ETF |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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