Correlation Between Pace High and Vanguard Extended
Can any of the company-specific risk be diversified away by investing in both Pace High and Vanguard Extended 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 Pace High and Vanguard Extended into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace High Yield and Vanguard Extended Market, you can compare the effects of market volatilities on Pace High and Vanguard Extended 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 Pace High with a short position of Vanguard Extended. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and Vanguard Extended.
Diversification Opportunities for Pace High and Vanguard Extended
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pace and Vanguard is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield and Vanguard Extended Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Extended Market and Pace High 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 Pace High Yield are associated (or correlated) with Vanguard Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Extended Market has no effect on the direction of Pace High i.e., Pace High and Vanguard Extended go up and down completely randomly.
Pair Corralation between Pace High and Vanguard Extended
Assuming the 90 days horizon Pace High is expected to generate 2.89 times less return on investment than Vanguard Extended. But when comparing it to its historical volatility, Pace High Yield is 8.82 times less risky than Vanguard Extended. It trades about 0.51 of its potential returns per unit of risk. Vanguard Extended Market is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 14,313 in Vanguard Extended Market on June 9, 2025 and sell it today you would earn a total of 1,457 from holding Vanguard Extended Market or generate 10.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace High Yield vs. Vanguard Extended Market
Performance |
| Timeline |
| Pace High Yield |
| Vanguard Extended Market |
Pace High and Vanguard Extended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace High and Vanguard Extended
The main advantage of trading using opposite Pace High and Vanguard Extended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace High position performs unexpectedly, Vanguard Extended 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 Extended will offset losses from the drop in Vanguard Extended's long position.| Pace High vs. Pace Smallmedium Value | Pace High vs. Pace International Equity | Pace High vs. Ubs Allocation Fund | Pace High vs. Ubs Allocation Fund |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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