Correlation Between Vanguard International and Vanguard Growth
Can any of the company-specific risk be diversified away by investing in both Vanguard International and Vanguard Growth 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 International and Vanguard Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard International Growth and Vanguard Growth Index, you can compare the effects of market volatilities on Vanguard International and Vanguard Growth 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 International with a short position of Vanguard Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard International and Vanguard Growth.
Diversification Opportunities for Vanguard International and Vanguard Growth
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and Vanguard is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard International Growth and Vanguard Growth Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Growth Index and Vanguard International 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 International Growth are associated (or correlated) with Vanguard Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Growth Index has no effect on the direction of Vanguard International i.e., Vanguard International and Vanguard Growth go up and down completely randomly.
Pair Corralation between Vanguard International and Vanguard Growth
Assuming the 90 days horizon Vanguard International Growth is expected to under-perform the Vanguard Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard International Growth is 1.44 times less risky than Vanguard Growth. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Vanguard Growth Index is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 20,391 in Vanguard Growth Index on August 30, 2024 and sell it today you would earn a total of 494.00 from holding Vanguard Growth Index or generate 2.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard International Growth vs. Vanguard Growth Index
Performance |
| Timeline |
| Vanguard International |
| Vanguard Growth Index |
Vanguard International and Vanguard Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard International and Vanguard Growth
The main advantage of trading using opposite Vanguard International and Vanguard Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard International position performs unexpectedly, Vanguard Growth 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 Vanguard Growth will offset losses from the drop in Vanguard Growth's long position.The idea behind Vanguard International Growth and Vanguard Growth Index 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.
| Vanguard Growth vs. Vanguard Value Index | Vanguard Growth vs. Vanguard Mid Cap Index | Vanguard Growth vs. Vanguard Small Cap Growth | Vanguard Growth vs. Vanguard 500 Index |
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.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |