Correlation Between Vanguard Inflation and Barclays PLC
Can any of the company-specific risk be diversified away by investing in both Vanguard Inflation and Barclays PLC 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 and Barclays PLC 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 Barclays PLC ADR, you can compare the effects of market volatilities on Vanguard Inflation and Barclays PLC 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 with a short position of Barclays PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Inflation and Barclays PLC.
Diversification Opportunities for Vanguard Inflation and Barclays PLC
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vanguard and Barclays is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Inflation Protected S and Barclays PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays PLC ADR and Vanguard Inflation 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 Barclays PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays PLC ADR has no effect on the direction of Vanguard Inflation i.e., Vanguard Inflation and Barclays PLC go up and down completely randomly.
Pair Corralation between Vanguard Inflation and Barclays PLC
Assuming the 90 days horizon Vanguard Inflation Protected Securities is expected to under-perform the Barclays PLC. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard Inflation Protected Securities is 4.51 times less risky than Barclays PLC. The mutual fund trades about -0.16 of its potential returns per unit of risk. The Barclays PLC ADR is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 926.00 in Barclays PLC ADR on January 25, 2024 and sell it today you would earn a total of 34.00 from holding Barclays PLC ADR or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Inflation Protected S vs. Barclays PLC ADR
Performance |
| Timeline |
| Vanguard Inflation |
| Barclays PLC ADR |
Vanguard Inflation and Barclays PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Inflation and Barclays PLC
The main advantage of trading using opposite Vanguard Inflation and Barclays PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Inflation position performs unexpectedly, Barclays PLC 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 Barclays PLC will offset losses from the drop in Barclays PLC's long position.The idea behind Vanguard Inflation Protected Securities and Barclays PLC ADR 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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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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