Correlation Between Vanguard Total and Van Eck

Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Van Eck 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 Total and Van Eck into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vanguard Total Bond and Van Eck, you can compare the effects of market volatilities on Vanguard Total and Van Eck 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 Total with a short position of Van Eck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Van Eck.

Diversification Opportunities for Vanguard Total and Van Eck

-0.88

Correlation Coefficient

Vanguard Total  Van Eck

Pay attention - limited upside

The 3 months correlation between Vanguard and Van is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and Van Eck in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Van Eck and Vanguard Total 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 Total Bond are associated (or correlated) with Van Eck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Van Eck has no effect on the direction of Vanguard Total i.e., Vanguard Total and Van Eck go up and down completely randomly.

Pair Corralation between Vanguard Total and Van Eck

Considering the 90-day investment horizon Vanguard Total Bond is expected to under-perform the Van Eck. In addition to that, Vanguard Total is 1.48 times more volatile than Van Eck. It trades about -0.03 of its total potential returns per unit of risk. Van Eck is currently generating about 0.27 per unit of volatility. If you would invest  2,720  in Van Eck on September 1, 2024 and sell it today you would earn a total of  47.00  from holding Van Eck or generate 1.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	47.62%
Values	Daily Returns

Vanguard Total Bond  vs.  Van Eck

Vanguard Total Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Total Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Vanguard Total is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Van Eck

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Van Eck has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Van Eck is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vanguard Total and Van Eck

The main advantage of trading using opposite Vanguard Total and Van Eck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Van Eck 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 Van Eck will offset losses from the drop in Van Eck's long position.

The idea behind Vanguard Total Bond and Van Eck 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.