Correlation Between Vanguard Extended and Barrons 400
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and Barrons 400 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 Extended and Barrons 400 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Market and Barrons 400 ETF, you can compare the effects of market volatilities on Vanguard Extended and Barrons 400 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 Extended with a short position of Barrons 400. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Barrons 400.
Diversification Opportunities for Vanguard Extended and Barrons 400
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Barrons is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Barrons 400 ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrons 400 ETF and Vanguard Extended 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 Extended Market are associated (or correlated) with Barrons 400. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrons 400 ETF has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Barrons 400 go up and down completely randomly.
Pair Corralation between Vanguard Extended and Barrons 400
Considering the 90-day investment horizon Vanguard Extended Market is expected to generate 1.05 times more return on investment than Barrons 400. However, Vanguard Extended is 1.05 times more volatile than Barrons 400 ETF. It trades about 0.32 of its potential returns per unit of risk. Barrons 400 ETF is currently generating about 0.3 per unit of risk. If you would invest 18,579 in Vanguard Extended Market on August 30, 2024 and sell it today you would earn a total of 1,875 from holding Vanguard Extended Market or generate 10.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Extended Market vs. Barrons 400 ETF
Performance |
| Timeline |
| Vanguard Extended Market |
| Barrons 400 ETF |
Vanguard Extended and Barrons 400 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and Barrons 400
The main advantage of trading using opposite Vanguard Extended and Barrons 400 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, Barrons 400 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 Barrons 400 will offset losses from the drop in Barrons 400's long position.| Vanguard Extended vs. Vanguard Large Cap Index | Vanguard Extended vs. Vanguard Small Cap Growth | Vanguard Extended vs. Vanguard Mid Cap Index | Vanguard Extended vs. Vanguard Mid Cap Growth |
| Barrons 400 vs. FlexShares Quality Dividend | Barrons 400 vs. Invesco SP Spin Off | Barrons 400 vs. SPDR MSCI USA | Barrons 400 vs. ALPS International Sector |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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