Correlation Between Vanguard Total and Vanguard Dividend
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Vanguard Dividend 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 Dividend 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 Dividend Appreciation, you can compare the effects of market volatilities on Vanguard Total and Vanguard Dividend 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 Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Vanguard Dividend.
Diversification Opportunities for Vanguard Total and Vanguard Dividend
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Vanguard is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Market and Vanguard Dividend Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Dividend 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 Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Dividend has no effect on the direction of Vanguard Total i.e., Vanguard Total and Vanguard Dividend go up and down completely randomly.
Pair Corralation between Vanguard Total and Vanguard Dividend
Assuming the 90 days trading horizon Vanguard Total Market is expected to generate 1.27 times more return on investment than Vanguard Dividend. However, Vanguard Total is 1.27 times more volatile than Vanguard Dividend Appreciation. It trades about 0.11 of its potential returns per unit of risk. Vanguard Dividend Appreciation is currently generating about 0.11 per unit of risk. If you would invest 7,816 in Vanguard Total Market on August 28, 2024 and sell it today you would earn a total of 2,739 from holding Vanguard Total Market or generate 35.04% 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 Dividend Appreciation
Performance |
| Timeline |
| Vanguard Total Market |
| Vanguard Dividend |
Vanguard Total and Vanguard Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Vanguard Dividend
The main advantage of trading using opposite Vanguard Total and Vanguard Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Vanguard Dividend 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 Dividend will offset losses from the drop in Vanguard Dividend's long position.| Vanguard Total vs. Vanguard FTSE Developed | Vanguard Total vs. iShares Core Canadian | Vanguard Total vs. BMO Long Federal | Vanguard Total vs. Vanguard FTSE Canada |
| Vanguard Dividend vs. Vanguard Dividend Appreciation | Vanguard Dividend vs. Vanguard Total Market | Vanguard Dividend vs. Vanguard FTSE Developed | Vanguard Dividend vs. Vanguard FTSE Developed |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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