Correlation Between Vanguard Windsor and American Growth
Can any of the company-specific risk be diversified away by investing in both Vanguard Windsor and American 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 Windsor and American Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Windsor Fund and American Growth Fund, you can compare the effects of market volatilities on Vanguard Windsor and American 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 Windsor with a short position of American Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Windsor and American Growth.
Diversification Opportunities for Vanguard Windsor and American Growth
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Vanguard and American is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Windsor Fund and American Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Growth and Vanguard Windsor 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 Windsor Fund are associated (or correlated) with American Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Growth has no effect on the direction of Vanguard Windsor i.e., Vanguard Windsor and American Growth go up and down completely randomly.
Pair Corralation between Vanguard Windsor and American Growth
Assuming the 90 days horizon Vanguard Windsor Fund is expected to generate 0.62 times more return on investment than American Growth. However, Vanguard Windsor Fund is 1.61 times less risky than American Growth. It trades about 0.09 of its potential returns per unit of risk. American Growth Fund is currently generating about 0.03 per unit of risk. If you would invest 1,974 in Vanguard Windsor Fund on September 12, 2024 and sell it today you would earn a total of 461.00 from holding Vanguard Windsor Fund or generate 23.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Windsor Fund vs. American Growth Fund
Performance |
| Timeline |
| Vanguard Windsor |
| American Growth |
Vanguard Windsor and American Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Windsor and American Growth
The main advantage of trading using opposite Vanguard Windsor and American Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Windsor position performs unexpectedly, American 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 American Growth will offset losses from the drop in American Growth's long position.| Vanguard Windsor vs. Vanguard Explorer Fund | Vanguard Windsor vs. Vanguard Primecap Fund | Vanguard Windsor vs. Vanguard Wellington Fund | Vanguard Windsor vs. Vanguard Windsor Ii |
| American Growth vs. Prudential High Yield | American Growth vs. Msift High Yield | American Growth vs. T Rowe Price | American Growth vs. Payden High 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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