Correlation Between Vanguard Total and E Fixed

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

By analyzing existing cross correlation between Vanguard Total International and The E Fixed, you can compare the effects of market volatilities on Vanguard Total and E Fixed 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 Total with a short position of E Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and E Fixed.

Diversification Opportunities for Vanguard Total and E Fixed

0.87

Correlation Coefficient

Vanguard Total  E Fixed

Very poor diversification

The 3 months correlation between Vanguard and HCIIX is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total International and The E Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Fixed and Vanguard Total 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 Total International are associated (or correlated) with E Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Fixed has no effect on the direction of Vanguard Total i.e., Vanguard Total and E Fixed go up and down completely randomly.

Pair Corralation between Vanguard Total and E Fixed

Assuming the 90 days horizon Vanguard Total International is expected to under-perform the E Fixed. In addition to that, Vanguard Total is 3.22 times more volatile than The E Fixed. It trades about -0.27 of its total potential returns per unit of risk. The E Fixed is currently generating about -0.54 per unit of volatility. If you would invest  851.00  in The E Fixed on October 17, 2024 and sell it today you would lose (19.00) from holding The E Fixed or give up 2.23% of portfolio value over 90 days.

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

Vanguard Total International  vs.  The E Fixed

Vanguard Total Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Total International has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

E Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The E Fixed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, E Fixed 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 Total and E Fixed

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

The idea behind Vanguard Total International and The E Fixed 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.