Correlation Between AAM SP and Vanguard Value
Can any of the company-specific risk be diversified away by investing in both AAM SP and Vanguard Value 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 AAM SP and Vanguard Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAM SP 500 and Vanguard Value Index, you can compare the effects of market volatilities on AAM SP and Vanguard Value 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 AAM SP with a short position of Vanguard Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAM SP and Vanguard Value.
Diversification Opportunities for AAM SP and Vanguard Value
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AAM and Vanguard is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding AAM SP 500 and Vanguard Value Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Value Index and AAM SP 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 AAM SP 500 are associated (or correlated) with Vanguard Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Value Index has no effect on the direction of AAM SP i.e., AAM SP and Vanguard Value go up and down completely randomly.
Pair Corralation between AAM SP and Vanguard Value
Given the investment horizon of 90 days AAM SP 500 is expected to under-perform the Vanguard Value. In addition to that, AAM SP is 1.3 times more volatile than Vanguard Value Index. It trades about -0.24 of its total potential returns per unit of risk. Vanguard Value Index is currently generating about -0.22 per unit of volatility. If you would invest 15,987 in Vanguard Value Index on January 20, 2024 and sell it today you would lose (506.00) from holding Vanguard Value Index or give up 3.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
AAM SP 500 vs. Vanguard Value Index
Performance |
| Timeline |
| AAM SP 500 |
| Vanguard Value Index |
AAM SP and Vanguard Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAM SP and Vanguard Value
The main advantage of trading using opposite AAM SP and Vanguard Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAM SP position performs unexpectedly, Vanguard Value 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 Value will offset losses from the drop in Vanguard Value's long position.| AAM SP vs. SPDR Portfolio Aggregate | AAM SP vs. AAM SP Emerging | AAM SP vs. WBI Power Factor | AAM SP vs. AAM SP Developed |
| Vanguard Value vs. Vanguard Growth Index | Vanguard Value vs. Vanguard Small Cap Value | Vanguard Value vs. Vanguard Mid Cap Value | Vanguard Value vs. Vanguard Small Cap Index |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |