Correlation Between Vanguard Extended and Victory High
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and Victory High 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 Victory High 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 Victory High Income, you can compare the effects of market volatilities on Vanguard Extended and Victory High 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 Victory High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Victory High.
Diversification Opportunities for Vanguard Extended and Victory High
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vanguard and Victory is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Victory High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory High Income 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 Victory High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory High Income has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Victory High go up and down completely randomly.
Pair Corralation between Vanguard Extended and Victory High
Assuming the 90 days horizon Vanguard Extended Market is expected to generate 2.71 times more return on investment than Victory High. However, Vanguard Extended is 2.71 times more volatile than Victory High Income. It trades about 0.2 of its potential returns per unit of risk. Victory High Income is currently generating about 0.01 per unit of risk. If you would invest 33,107 in Vanguard Extended Market on September 13, 2024 and sell it today you would earn a total of 4,661 from holding Vanguard Extended Market or generate 14.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Vanguard Extended Market vs. Victory High Income
Performance |
Timeline |
Vanguard Extended Market |
Victory High Income |
Vanguard Extended and Victory High Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard Extended and Victory High
The main advantage of trading using opposite Vanguard Extended and Victory High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, Victory High 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 Victory High will offset losses from the drop in Victory High's long position.Vanguard Extended vs. Vanguard Materials Index | Vanguard Extended vs. Vanguard Limited Term Tax Exempt | Vanguard Extended vs. Vanguard Limited Term Tax Exempt | Vanguard Extended vs. Vanguard Global Minimum |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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