Correlation Between Vanguard Target and Blackrock Lifepth

Can any of the company-specific risk be diversified away by investing in both Vanguard Target and Blackrock Lifepth 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 Target and Blackrock Lifepth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vanguard Target Retirement and Blackrock Lifepth Idx, you can compare the effects of market volatilities on Vanguard Target and Blackrock Lifepth 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 Target with a short position of Blackrock Lifepth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Target and Blackrock Lifepth.

Diversification Opportunities for Vanguard Target and Blackrock Lifepth

0.99

Correlation Coefficient

Vanguard Target  Blackrock Lifepth

No risk reduction

The 3 months correlation between Vanguard and Blackrock is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Target Retirement and Blackrock Lifepth Idx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Lifepth Idx and Vanguard Target 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 Target Retirement are associated (or correlated) with Blackrock Lifepth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Lifepth Idx has no effect on the direction of Vanguard Target i.e., Vanguard Target and Blackrock Lifepth go up and down completely randomly.

Pair Corralation between Vanguard Target and Blackrock Lifepth

Assuming the 90 days horizon Vanguard Target Retirement is expected to generate 0.74 times more return on investment than Blackrock Lifepth. However, Vanguard Target Retirement is 1.35 times less risky than Blackrock Lifepth. It trades about -0.23 of its potential returns per unit of risk. Blackrock Lifepth Idx is currently generating about -0.24 per unit of risk. If you would invest  1,319  in Vanguard Target Retirement on January 26, 2024 and sell it today you would lose (20.00) from holding Vanguard Target Retirement or give up 1.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Vanguard Target Retirement  vs.  Blackrock Lifepth Idx

Vanguard Target Reti

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Target Retirement are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Target is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Lifepth Idx

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Lifepth Idx are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Blackrock Lifepth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Target and Blackrock Lifepth

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

The idea behind Vanguard Target Retirement and Blackrock Lifepth Idx 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.