Correlation Between Vanguard Information and Western Asset
Can any of the company-specific risk be diversified away by investing in both Vanguard Information and Western 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 Information and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Information Technology and Western Asset Inflation, you can compare the effects of market volatilities on Vanguard Information and Western 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 Information with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Information and Western Asset.
Diversification Opportunities for Vanguard Information and Western Asset
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Western is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Information Technolog and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Inflation and Vanguard Information 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 Information Technology are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Inflation has no effect on the direction of Vanguard Information i.e., Vanguard Information and Western Asset go up and down completely randomly.
Pair Corralation between Vanguard Information and Western Asset
Assuming the 90 days horizon Vanguard Information Technology is expected to under-perform the Western Asset. In addition to that, Vanguard Information is 5.56 times more volatile than Western Asset Inflation. It trades about -0.07 of its total potential returns per unit of risk. Western Asset Inflation is currently generating about -0.35 per unit of volatility. If you would invest 901.00 in Western Asset Inflation on October 12, 2024 and sell it today you would lose (15.00) from holding Western Asset Inflation or give up 1.66% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Vanguard Information Technolog vs. Western Asset Inflation
Performance |
Timeline |
Vanguard Information |
Western Asset Inflation |
Vanguard Information and Western Asset Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard Information and Western Asset
The main advantage of trading using opposite Vanguard Information and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Information position performs unexpectedly, Western 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 Western Asset will offset losses from the drop in Western Asset's long position.Vanguard Information vs. Vanguard Health Care | Vanguard Information vs. Vanguard Financials Index | Vanguard Information vs. Vanguard Sumer Discretionary | Vanguard Information vs. Vanguard Utilities Index |
Western Asset vs. Blackrock Science Technology | Western Asset vs. Firsthand Technology Opportunities | Western Asset vs. Goldman Sachs Technology | Western Asset vs. Vanguard Information Technology |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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