Correlation Between Vanguard Large and Dimensional Core
Can any of the company-specific risk be diversified away by investing in both Vanguard Large and Dimensional Core 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 Large and Dimensional Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Large Cap Index and Dimensional Core Equity, you can compare the effects of market volatilities on Vanguard Large and Dimensional Core 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 Large with a short position of Dimensional Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Large and Dimensional Core.
Diversification Opportunities for Vanguard Large and Dimensional Core
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Dimensional is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Large Cap Index and Dimensional Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Core Equity and Vanguard Large 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 Large Cap Index are associated (or correlated) with Dimensional Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Core Equity has no effect on the direction of Vanguard Large i.e., Vanguard Large and Dimensional Core go up and down completely randomly.
Pair Corralation between Vanguard Large and Dimensional Core
Allowing for the 90-day total investment horizon Vanguard Large Cap Index is expected to generate 1.0 times more return on investment than Dimensional Core. However, Vanguard Large Cap Index is 1.0 times less risky than Dimensional Core. It trades about 0.16 of its potential returns per unit of risk. Dimensional Core Equity is currently generating about 0.15 per unit of risk. If you would invest 19,304 in Vanguard Large Cap Index on August 25, 2024 and sell it today you would earn a total of 8,123 from holding Vanguard Large Cap Index or generate 42.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Large Cap Index vs. Dimensional Core Equity
Performance |
| Timeline |
| Vanguard Large Cap |
| Dimensional Core Equity |
Vanguard Large and Dimensional Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Large and Dimensional Core
The main advantage of trading using opposite Vanguard Large and Dimensional Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Large position performs unexpectedly, Dimensional Core 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 Dimensional Core will offset losses from the drop in Dimensional Core's long position.| Vanguard Large vs. Vanguard Mid Cap Index | Vanguard Large vs. Vanguard Small Cap Index | Vanguard Large vs. Vanguard Extended Market | Vanguard Large vs. Vanguard Small Cap Growth |
| Dimensional Core vs. Dimensional International Core | Dimensional Core vs. Dimensional Emerging Core | Dimensional Core vs. Dimensional Core Equity | Dimensional Core vs. Dimensional Small Cap |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |