Correlation Between Vanguard Balanced and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Vanguard Balanced and Dow Jones 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 Balanced and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Balanced Index and Dow Jones Industrial, you can compare the effects of market volatilities on Vanguard Balanced and Dow Jones 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 Balanced with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Balanced and Dow Jones.
Diversification Opportunities for Vanguard Balanced and Dow Jones
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Dow is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Balanced Index and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Vanguard Balanced 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 Balanced Index are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Vanguard Balanced i.e., Vanguard Balanced and Dow Jones go up and down completely randomly.
Pair Corralation between Vanguard Balanced and Dow Jones
Assuming the 90 days horizon Vanguard Balanced Index is expected to generate 0.6 times more return on investment than Dow Jones. However, Vanguard Balanced Index is 1.68 times less risky than Dow Jones. It trades about 0.25 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.14 per unit of risk. If you would invest 4,854 in Vanguard Balanced Index on June 9, 2025 and sell it today you would earn a total of 320.00 from holding Vanguard Balanced Index or generate 6.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Balanced Index vs. Dow Jones Industrial
Performance |
| Timeline |
Vanguard Balanced and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Vanguard Balanced Index
Pair trading matchups for Vanguard Balanced
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Vanguard Balanced and Dow Jones
The main advantage of trading using opposite Vanguard Balanced and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Balanced position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Vanguard Balanced vs. Vanguard Wellesley Income | Vanguard Balanced vs. Vanguard Windsor Ii | Vanguard Balanced vs. Vanguard International Growth | Vanguard Balanced vs. Vanguard Primecap Fund |
| Dow Jones vs. IPG Photonics | Dow Jones vs. Jeld Wen Holding | Dow Jones vs. Aspen Aerogels | Dow Jones vs. Eldorado Gold Corp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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