Correlation Between Vanguard Inflation and American Funds
Can any of the company-specific risk be diversified away by investing in both Vanguard Inflation and American Funds 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 American Funds 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 American Funds Global, you can compare the effects of market volatilities on Vanguard Inflation and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Inflation and American Funds.
Diversification Opportunities for Vanguard Inflation and American Funds
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Vanguard and American is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Inflation Protected S and American Funds Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Global 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Global has no effect on the direction of Vanguard Inflation i.e., Vanguard Inflation and American Funds go up and down completely randomly.
Pair Corralation between Vanguard Inflation and American Funds
Assuming the 90 days horizon Vanguard Inflation Protected Securities is expected to generate 0.53 times more return on investment than American Funds. However, Vanguard Inflation Protected Securities is 1.9 times less risky than American Funds. It trades about -0.14 of its potential returns per unit of risk. American Funds Global is currently generating about -0.29 per unit of risk. If you would invest 2,284 in Vanguard Inflation Protected Securities on January 20, 2024 and sell it today you would lose (24.00) from holding Vanguard Inflation Protected Securities or give up 1.05% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Vanguard Inflation Protected S vs. American Funds Global
Performance |
Timeline |
Vanguard Inflation |
American Funds Global |
Vanguard Inflation and American Funds Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard Inflation and American Funds
The main advantage of trading using opposite Vanguard Inflation and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Inflation position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.Vanguard Inflation vs. Vanguard Short Term Investment Grade | Vanguard Inflation vs. Vanguard High Yield Porate | Vanguard Inflation vs. Vanguard Gnma Fund | Vanguard Inflation vs. Vanguard Reit Index |
American Funds vs. Columbia Capital Allocation | American Funds vs. State Street Institutional | American Funds vs. Blackrock Basic Value | American Funds vs. Europacific Growth Fund |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |