Correlation Between Vanguard Value and Equity Income
Can any of the company-specific risk be diversified away by investing in both Vanguard Value and Equity Income 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 Value and Equity Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Value Index and Equity Income Fund, you can compare the effects of market volatilities on Vanguard Value and Equity Income 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 Value with a short position of Equity Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Value and Equity Income.
Diversification Opportunities for Vanguard Value and Equity Income
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and EQUITY is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index and Equity Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Income and Vanguard Value 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 Value Index are associated (or correlated) with Equity Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Income has no effect on the direction of Vanguard Value i.e., Vanguard Value and Equity Income go up and down completely randomly.
Pair Corralation between Vanguard Value and Equity Income
Assuming the 90 days horizon Vanguard Value is expected to generate 1.21 times less return on investment than Equity Income. In addition to that, Vanguard Value is 1.02 times more volatile than Equity Income Fund. It trades about 0.13 of its total potential returns per unit of risk. Equity Income Fund is currently generating about 0.16 per unit of volatility. If you would invest 4,353 in Equity Income Fund on August 30, 2024 and sell it today you would earn a total of 209.00 from holding Equity Income Fund or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.73% |
| Values | Daily Returns |
Vanguard Value Index vs. Equity Income Fund
Performance |
| Timeline |
| Vanguard Value Index |
| Equity Income |
Vanguard Value and Equity Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Value and Equity Income
The main advantage of trading using opposite Vanguard Value and Equity Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Value position performs unexpectedly, Equity Income 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 Equity Income will offset losses from the drop in Equity Income's long position.| Vanguard Value vs. Vanguard Small Cap Value | Vanguard Value vs. Vanguard Growth Index | Vanguard Value vs. Vanguard Mid Cap Value | Vanguard Value vs. Vanguard Small Cap Index |
| Equity Income vs. Us Government Securities | Equity Income vs. Federated Government Ultrashort | Equity Income vs. Lord Abbett Government | Equity Income vs. Prudential Government Income |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |