Correlation Between Vanguard and LG Russell
Can any of the company-specific risk be diversified away by investing in both Vanguard and LG Russell 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 and LG Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard SP 500 and LG Russell 2000, you can compare the effects of market volatilities on Vanguard and LG Russell 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 with a short position of LG Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and LG Russell.
Diversification Opportunities for Vanguard and LG Russell
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and RTWO is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 and LG Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Russell 2000 and Vanguard 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 SP 500 are associated (or correlated) with LG Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Russell 2000 has no effect on the direction of Vanguard i.e., Vanguard and LG Russell go up and down completely randomly.
Pair Corralation between Vanguard and LG Russell
Assuming the 90 days trading horizon Vanguard SP 500 is expected to generate 0.62 times more return on investment than LG Russell. However, Vanguard SP 500 is 1.61 times less risky than LG Russell. It trades about 0.14 of its potential returns per unit of risk. LG Russell 2000 is currently generating about 0.06 per unit of risk. If you would invest 7,522 in Vanguard SP 500 on February 28, 2024 and sell it today you would earn a total of 1,765 from holding Vanguard SP 500 or generate 23.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Vanguard SP 500 vs. LG Russell 2000
Performance |
Timeline |
Vanguard SP 500 |
LG Russell 2000 |
Vanguard and LG Russell Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard and LG Russell
The main advantage of trading using opposite Vanguard and LG Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, LG Russell 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 LG Russell will offset losses from the drop in LG Russell's long position.Vanguard vs. SPDR Dow Jones | Vanguard vs. iShares Core MSCI | Vanguard vs. iShares SP 500 | Vanguard vs. Vanguard FTSE All World |
LG Russell vs. Vanguard SP 500 | LG Russell vs. SPDR Dow Jones | LG Russell vs. iShares Core MSCI | LG Russell vs. iShares SP 500 |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance |