Correlation Between Vanguard Total and United States
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and United States 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 United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Bond and United States Oil, you can compare the effects of market volatilities on Vanguard Total and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and United States.
Diversification Opportunities for Vanguard Total and United States
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and United is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and United States Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Oil 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 Bond are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Oil has no effect on the direction of Vanguard Total i.e., Vanguard Total and United States go up and down completely randomly.
Pair Corralation between Vanguard Total and United States
Considering the 90-day investment horizon Vanguard Total Bond is expected to under-perform the United States. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Total Bond is 3.37 times less risky than United States. The etf trades about -0.09 of its potential returns per unit of risk. The United States Oil is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 7,242 in United States Oil on January 20, 2024 and sell it today you would earn a total of 643.00 from holding United States Oil or generate 8.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 97.73% |
Values | Daily Returns |
Vanguard Total Bond vs. United States Oil
Performance |
Timeline |
Vanguard Total Bond |
United States Oil |
Vanguard Total and United States Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard Total and United States
The main advantage of trading using opposite Vanguard Total and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.Vanguard Total vs. Vanguard Short Term Bond | Vanguard Total vs. Vanguard Long Term Bond | Vanguard Total vs. Vanguard Intermediate Term Corporate | Vanguard Total vs. Vanguard Short Term Corporate |
United States vs. United States Natural | United States vs. SPDR Gold Shares | United States vs. ProShares Ultra Bloomberg | United States vs. Energy Select Sector |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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