Correlation Between Vanguard Target and Vanguard Institutional

Can any of the company-specific risk be diversified away by investing in both Vanguard Target and Vanguard Institutional 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 Vanguard Institutional 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 Vanguard Institutional Target, you can compare the effects of market volatilities on Vanguard Target and Vanguard Institutional 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 Vanguard Institutional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Target and Vanguard Institutional.

Diversification Opportunities for Vanguard Target and Vanguard Institutional

0.0

Correlation Coefficient

Vanguard Target  Vanguard Institutional

Pay attention - limited upside

The 3 months correlation between Vanguard and Vanguard is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Target Retirement and Vanguard Institutional Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Institutional 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 Vanguard Institutional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Institutional has no effect on the direction of Vanguard Target i.e., Vanguard Target and Vanguard Institutional go up and down completely randomly.

Pair Corralation between Vanguard Target and Vanguard Institutional

If you would invest  1,698  in Vanguard Target Retirement on January 17, 2024 and sell it today you would earn a total of  161.00  from holding Vanguard Target Retirement or generate 9.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Vanguard Target Retirement  vs.  Vanguard Institutional Target

Vanguard Target Reti

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Target Retirement are ranked lower than 8 (%) 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.

Vanguard Institutional

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Institutional Target has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Vanguard Institutional 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 Vanguard Institutional

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

The idea behind Vanguard Target Retirement and Vanguard Institutional Target 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.