Correlation Between Vanguard Funds and Vanguard Russell

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

By analyzing existing cross correlation between Vanguard Funds Public and Vanguard Russell 2000, you can compare the effects of market volatilities on Vanguard Funds and Vanguard Russell 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 Funds with a short position of Vanguard Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Funds and Vanguard Russell.

Diversification Opportunities for Vanguard Funds and Vanguard Russell

-0.6

Correlation Coefficient

Vanguard Funds  Vanguard Russell

Excellent diversification

The 3 months correlation between Vanguard and Vanguard is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Funds Public and Vanguard Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Russell 2000 and Vanguard Funds 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 Funds Public are associated (or correlated) with Vanguard Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Russell 2000 has no effect on the direction of Vanguard Funds i.e., Vanguard Funds and Vanguard Russell go up and down completely randomly.

Pair Corralation between Vanguard Funds and Vanguard Russell

Assuming the 90 days horizon Vanguard Funds Public is expected to generate 0.27 times more return on investment than Vanguard Russell. However, Vanguard Funds Public is 3.64 times less risky than Vanguard Russell. It trades about 0.07 of its potential returns per unit of risk. Vanguard Russell 2000 is currently generating about -0.18 per unit of risk. If you would invest  5,764  in Vanguard Funds Public on December 5, 2024 and sell it today you would earn a total of  85.00  from holding Vanguard Funds Public or generate 1.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Vanguard Funds Public  vs.  Vanguard Russell 2000

Vanguard Funds Public

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Funds Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Vanguard Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Vanguard Russell 2000

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Russell 2000 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Etf's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with Vanguard Funds and Vanguard Russell

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

The idea behind Vanguard Funds Public and Vanguard Russell 2000 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.