Correlation Between Vanguard High and Akre Focus
Can any of the company-specific risk be diversified away by investing in both Vanguard High and Akre Focus 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 High and Akre Focus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard High Yield Porate and Akre Focus Fund, you can compare the effects of market volatilities on Vanguard High and Akre Focus 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 High with a short position of Akre Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard High and Akre Focus.
Diversification Opportunities for Vanguard High and Akre Focus
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and AKRE is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard High Yield Porate and Akre Focus Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akre Focus Fund and Vanguard High 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 High Yield Porate are associated (or correlated) with Akre Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akre Focus Fund has no effect on the direction of Vanguard High i.e., Vanguard High and Akre Focus go up and down completely randomly.
Pair Corralation between Vanguard High and Akre Focus
Assuming the 90 days horizon Vanguard High is expected to generate 6.83 times less return on investment than Akre Focus. But when comparing it to its historical volatility, Vanguard High Yield Porate is 5.01 times less risky than Akre Focus. It trades about 0.21 of its potential returns per unit of risk. Akre Focus Fund is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 7,134 in Akre Focus Fund on August 29, 2024 and sell it today you would earn a total of 380.00 from holding Akre Focus Fund or generate 5.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vanguard High Yield Porate vs. Akre Focus Fund
Performance |
| Timeline |
| Vanguard High Yield |
| Akre Focus Fund |
Vanguard High and Akre Focus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard High and Akre Focus
The main advantage of trading using opposite Vanguard High and Akre Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard High position performs unexpectedly, Akre Focus 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 Akre Focus will offset losses from the drop in Akre Focus' long position.The idea behind Vanguard High Yield Porate and Akre Focus Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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