Correlation Between Vanguard Value and Federated Strategic
Can any of the company-specific risk be diversified away by investing in both Vanguard Value and Federated Strategic 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 Federated Strategic 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 Federated Strategic Value, you can compare the effects of market volatilities on Vanguard Value and Federated Strategic 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 Federated Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Value and Federated Strategic.
Diversification Opportunities for Vanguard Value and Federated Strategic
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Federated is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index and Federated Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Strategic Value 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 Federated Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Strategic Value has no effect on the direction of Vanguard Value i.e., Vanguard Value and Federated Strategic go up and down completely randomly.
Pair Corralation between Vanguard Value and Federated Strategic
Assuming the 90 days horizon Vanguard Value Index is expected to generate 0.79 times more return on investment than Federated Strategic. However, Vanguard Value Index is 1.26 times less risky than Federated Strategic. It trades about -0.12 of its potential returns per unit of risk. Federated Strategic Value is currently generating about -0.28 per unit of risk. If you would invest 6,933 in Vanguard Value Index on September 13, 2024 and sell it today you would lose (87.00) from holding Vanguard Value Index or give up 1.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard Value Index vs. Federated Strategic Value
Performance |
| Timeline |
| Vanguard Value Index |
| Federated Strategic Value |
Vanguard Value and Federated Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Value and Federated Strategic
The main advantage of trading using opposite Vanguard Value and Federated Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Value position performs unexpectedly, Federated Strategic 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 Federated Strategic will offset losses from the drop in Federated Strategic'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 |
| Federated Strategic vs. Federated Emerging Market | Federated Strategic vs. Federated Mdt All | Federated Strategic vs. Federated Mdt Balanced | Federated Strategic vs. Federated Global Allocation |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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