Correlation Between Vanguard Inflation-protec and Alternative Asset

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

By analyzing existing cross correlation between Vanguard Inflation Protected Securities and Alternative Asset Allocation, you can compare the effects of market volatilities on Vanguard Inflation-protec and Alternative Asset 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 Inflation-protec with a short position of Alternative Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Inflation-protec and Alternative Asset.

Diversification Opportunities for Vanguard Inflation-protec and Alternative Asset

0.24

Correlation Coefficient

Vanguard Inflation-protec  Alternative Asset

Modest diversification

The 3 months correlation between Vanguard and Alternative is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Inflation Protected S and Alternative Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Asset and Vanguard Inflation-protec 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 Inflation Protected Securities are associated (or correlated) with Alternative Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Asset has no effect on the direction of Vanguard Inflation-protec i.e., Vanguard Inflation-protec and Alternative Asset go up and down completely randomly.

Pair Corralation between Vanguard Inflation-protec and Alternative Asset

Assuming the 90 days horizon Vanguard Inflation Protected Securities is expected to under-perform the Alternative Asset. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard Inflation Protected Securities is 1.28 times less risky than Alternative Asset. The mutual fund trades about -0.16 of its potential returns per unit of risk. The Alternative Asset Allocation is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,608  in Alternative Asset Allocation on October 10, 2024 and sell it today you would lose (13.00) from holding Alternative Asset Allocation or give up 0.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Vanguard Inflation Protected S  vs.  Alternative Asset Allocation

Vanguard Inflation-protec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Inflation Protected Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Vanguard Inflation-protec is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alternative Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alternative Asset Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Alternative Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Inflation-protec and Alternative Asset

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

The idea behind Vanguard Inflation Protected Securities and Alternative Asset Allocation 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..