Correlation Between Vanguard Total and Vanguard All
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Vanguard All 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 Vanguard All into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Market and Vanguard All Equity ETF, you can compare the effects of market volatilities on Vanguard Total and Vanguard All 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 Vanguard All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Vanguard All.
Diversification Opportunities for Vanguard Total and Vanguard All
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Vanguard is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Market and Vanguard All Equity ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard All Equity 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 Market are associated (or correlated) with Vanguard All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard All Equity has no effect on the direction of Vanguard Total i.e., Vanguard Total and Vanguard All go up and down completely randomly.
Pair Corralation between Vanguard Total and Vanguard All
Assuming the 90 days trading horizon Vanguard Total Market is expected to generate 1.66 times more return on investment than Vanguard All. However, Vanguard Total is 1.66 times more volatile than Vanguard All Equity ETF. It trades about 0.26 of its potential returns per unit of risk. Vanguard All Equity ETF is currently generating about 0.24 per unit of risk. If you would invest 10,825 in Vanguard Total Market on August 29, 2024 and sell it today you would earn a total of 610.00 from holding Vanguard Total Market or generate 5.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Market vs. Vanguard All Equity ETF
Performance |
| Timeline |
| Vanguard Total Market |
| Vanguard All Equity |
Vanguard Total and Vanguard All Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Vanguard All
The main advantage of trading using opposite Vanguard Total and Vanguard All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Vanguard All 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 All will offset losses from the drop in Vanguard All's long position.| Vanguard Total vs. Vanguard FTSE Canada | Vanguard Total vs. Vanguard FTSE Emerging | Vanguard Total vs. iShares Core MSCI | Vanguard Total vs. Vanguard Canadian Aggregate |
| Vanguard All vs. Vanguard FTSE Canada | Vanguard All vs. Vanguard Canadian Aggregate | Vanguard All vs. Vanguard Total Market | Vanguard All vs. Vanguard FTSE Emerging |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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