Correlation Between Vanguard Extended and Optimize Strategy
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and Optimize Strategy 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 Optimize Strategy 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 Optimize Strategy Index, you can compare the effects of market volatilities on Vanguard Extended and Optimize Strategy 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 Optimize Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Optimize Strategy.
Diversification Opportunities for Vanguard Extended and Optimize Strategy
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Optimize is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Optimize Strategy Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimize Strategy Index 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 Optimize Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimize Strategy Index has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Optimize Strategy go up and down completely randomly.
Pair Corralation between Vanguard Extended and Optimize Strategy
Considering the 90-day investment horizon Vanguard Extended Market is expected to generate 1.05 times more return on investment than Optimize Strategy. However, Vanguard Extended is 1.05 times more volatile than Optimize Strategy Index. It trades about 0.23 of its potential returns per unit of risk. Optimize Strategy Index is currently generating about 0.16 per unit of risk. If you would invest 19,218 in Vanguard Extended Market on November 9, 2024 and sell it today you would earn a total of 849.00 from holding Vanguard Extended Market or generate 4.42% 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. Optimize Strategy Index
Performance |
| Timeline |
| Vanguard Extended Market |
| Optimize Strategy Index |
Vanguard Extended and Optimize Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and Optimize Strategy
The main advantage of trading using opposite Vanguard Extended and Optimize Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, Optimize Strategy 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 Optimize Strategy will offset losses from the drop in Optimize Strategy'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 |
| Optimize Strategy vs. Freedom Day Dividend | Optimize Strategy vs. Franklin Templeton ETF | Optimize Strategy vs. iShares MSCI China | Optimize Strategy vs. Tidal Trust II |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |