Correlation Between Vanguard 500 and Equity Growth
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Equity 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 500 and Equity Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard 500 Index and Equity Growth Fund, you can compare the effects of market volatilities on Vanguard 500 and Equity 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 500 with a short position of Equity Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Equity Growth.
Diversification Opportunities for Vanguard 500 and Equity Growth
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Equity is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Equity Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Growth and Vanguard 500 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 500 Index are associated (or correlated) with Equity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Growth has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Equity Growth go up and down completely randomly.
Pair Corralation between Vanguard 500 and Equity Growth
Assuming the 90 days horizon Vanguard 500 Index is expected to generate 0.97 times more return on investment than Equity Growth. However, Vanguard 500 Index is 1.03 times less risky than Equity Growth. It trades about -0.02 of its potential returns per unit of risk. Equity Growth Fund is currently generating about -0.04 per unit of risk. If you would invest 55,745 in Vanguard 500 Index on December 2, 2024 and sell it today you would lose (690.00) from holding Vanguard 500 Index or give up 1.24% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Vanguard 500 Index vs. Equity Growth Fund
Performance |
Timeline |
Vanguard 500 Index |
Equity Growth |
Vanguard 500 and Equity Growth Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard 500 and Equity Growth
The main advantage of trading using opposite Vanguard 500 and Equity Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Equity 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 Equity Growth will offset losses from the drop in Equity Growth's long position.Vanguard 500 vs. Vanguard Total Stock | Vanguard 500 vs. Vanguard Mid Cap Index | Vanguard 500 vs. Vanguard Small Cap Index | Vanguard 500 vs. Vanguard Total Bond |
Equity Growth vs. Income Growth Fund | Equity Growth vs. Equity Income Fund | Equity Growth vs. International Growth Fund | Equity Growth vs. Value Fund Investor |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
Global Correlations Find global opportunities by holding instruments from different markets | |
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |