Correlation Between Vanguard Large and ETRACS IFED
Can any of the company-specific risk be diversified away by investing in both Vanguard Large and ETRACS IFED 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 ETRACS IFED 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 ETRACS IFED Invest, you can compare the effects of market volatilities on Vanguard Large and ETRACS IFED 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 ETRACS IFED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Large and ETRACS IFED.
Diversification Opportunities for Vanguard Large and ETRACS IFED
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and ETRACS is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Large Cap Index and ETRACS IFED Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS IFED Invest 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 ETRACS IFED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS IFED Invest has no effect on the direction of Vanguard Large i.e., Vanguard Large and ETRACS IFED go up and down completely randomly.
Pair Corralation between Vanguard Large and ETRACS IFED
Allowing for the 90-day total investment horizon Vanguard Large Cap Index is expected to generate 0.79 times more return on investment than ETRACS IFED. However, Vanguard Large Cap Index is 1.27 times less risky than ETRACS IFED. It trades about 0.11 of its potential returns per unit of risk. ETRACS IFED Invest is currently generating about 0.08 per unit of risk. If you would invest 17,687 in Vanguard Large Cap Index on August 26, 2024 and sell it today you would earn a total of 9,740 from holding Vanguard Large Cap Index or generate 55.07% 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. ETRACS IFED Invest
Performance |
| Timeline |
| Vanguard Large Cap |
| ETRACS IFED Invest |
Vanguard Large and ETRACS IFED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Large and ETRACS IFED
The main advantage of trading using opposite Vanguard Large and ETRACS IFED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Large position performs unexpectedly, ETRACS IFED 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 ETRACS IFED will offset losses from the drop in ETRACS IFED'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 |
| ETRACS IFED vs. FT Vest Equity | ETRACS IFED vs. Northern Lights | ETRACS IFED vs. Dimensional International High | ETRACS IFED vs. First Trust Exchange Traded |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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