Correlation Between Vanguard Small and Total Return
Can any of the company-specific risk be diversified away by investing in both Vanguard Small and Total Return 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 Small and Total Return into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Value and Total Return Bond, you can compare the effects of market volatilities on Vanguard Small and Total Return 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 Small with a short position of Total Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Total Return.
Diversification Opportunities for Vanguard Small and Total Return
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Total is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Total Return Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return Bond and Vanguard Small 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 Small Cap Value are associated (or correlated) with Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return Bond has no effect on the direction of Vanguard Small i.e., Vanguard Small and Total Return go up and down completely randomly.
Pair Corralation between Vanguard Small and Total Return
Assuming the 90 days horizon Vanguard Small Cap Value is expected to under-perform the Total Return. In addition to that, Vanguard Small is 3.35 times more volatile than Total Return Bond. It trades about -0.46 of its total potential returns per unit of risk. Total Return Bond is currently generating about -0.27 per unit of volatility. If you would invest 1,108 in Total Return Bond on September 24, 2024 and sell it today you would lose (16.00) from holding Total Return Bond or give up 1.44% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.24% |
Values | Daily Returns |
Vanguard Small Cap Value vs. Total Return Bond
Performance |
Timeline |
Vanguard Small Cap |
Total Return Bond |
Vanguard Small and Total Return Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard Small and Total Return
The main advantage of trading using opposite Vanguard Small and Total Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small position performs unexpectedly, Total Return 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 Total Return will offset losses from the drop in Total Return's long position.Vanguard Small vs. Multisector Bond Sma | Vanguard Small vs. The National Tax Free | Vanguard Small vs. Alliancebernstein Bond | Vanguard Small vs. Pace High Yield |
Total Return vs. Mutual Of America | Total Return vs. Amg River Road | Total Return vs. Valic Company I | Total Return vs. Vanguard Small Cap Value |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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