Correlation Between Vanguard Inflation-protec and Vanguard Precious

Can any of the company-specific risk be diversified away by investing in both Vanguard Inflation-protec and Vanguard Precious 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-protec and Vanguard Precious 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 Vanguard Precious Metals, you can compare the effects of market volatilities on Vanguard Inflation-protec and Vanguard Precious 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-protec with a short position of Vanguard Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Inflation-protec and Vanguard Precious.

Diversification Opportunities for Vanguard Inflation-protec and Vanguard Precious

-0.14

Correlation Coefficient

Vanguard Inflation-protec  Vanguard Precious

Good diversification

The 3 months correlation between Vanguard and Vanguard is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Inflation Protected S and Vanguard Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Precious Metals and Vanguard Inflation-protec 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 Vanguard Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Precious Metals has no effect on the direction of Vanguard Inflation-protec i.e., Vanguard Inflation-protec and Vanguard Precious go up and down completely randomly.

Pair Corralation between Vanguard Inflation-protec and Vanguard Precious

Assuming the 90 days horizon Vanguard Inflation-protec is expected to generate 84.0 times less return on investment than Vanguard Precious. But when comparing it to its historical volatility, Vanguard Inflation Protected Securities is 2.74 times less risky than Vanguard Precious. It trades about 0.0 of its potential returns per unit of risk. Vanguard Precious Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,297  in Vanguard Precious Metals on February 5, 2024 and sell it today you would earn a total of  11.00  from holding Vanguard Precious Metals or generate 0.85% 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.  Vanguard Precious Metals

Vanguard Inflation-protec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Inflation Protected Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Vanguard Inflation-protec is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Precious Metals

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Precious Metals are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Vanguard Precious may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Vanguard Inflation-protec and Vanguard Precious

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

The idea behind Vanguard Inflation Protected Securities and Vanguard Precious Metals 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.