Correlation Between Vanguard Growth and Vanguard Multi-sector
Can any of the company-specific risk be diversified away by investing in both Vanguard Growth and Vanguard Multi-sector 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 Growth and Vanguard Multi-sector into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Growth Index and Vanguard Multi Sector Income, you can compare the effects of market volatilities on Vanguard Growth and Vanguard Multi-sector 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 Growth with a short position of Vanguard Multi-sector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and Vanguard Multi-sector.
Diversification Opportunities for Vanguard Growth and Vanguard Multi-sector
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VANGUARD and Vanguard is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and Vanguard Multi Sector Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Multi Sector and Vanguard Growth 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 Growth Index are associated (or correlated) with Vanguard Multi-sector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Multi Sector has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and Vanguard Multi-sector go up and down completely randomly.
Pair Corralation between Vanguard Growth and Vanguard Multi-sector
Assuming the 90 days horizon Vanguard Growth Index is expected to generate 8.73 times more return on investment than Vanguard Multi-sector. However, Vanguard Growth is 8.73 times more volatile than Vanguard Multi Sector Income. It trades about 0.06 of its potential returns per unit of risk. Vanguard Multi Sector Income is currently generating about 0.09 per unit of risk. If you would invest 20,132 in Vanguard Growth Index on March 25, 2025 and sell it today you would earn a total of 1,358 from holding Vanguard Growth Index or generate 6.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Growth Index vs. Vanguard Multi Sector Income
Performance |
| Timeline |
| Vanguard Growth Index |
| Vanguard Multi Sector |
Vanguard Growth and Vanguard Multi-sector Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Growth and Vanguard Multi-sector
The main advantage of trading using opposite Vanguard Growth and Vanguard Multi-sector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Growth position performs unexpectedly, Vanguard Multi-sector 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 Multi-sector will offset losses from the drop in Vanguard Multi-sector's long position.| Vanguard Growth vs. Vanguard Value Index | Vanguard Growth vs. Vanguard Mid Cap Index | Vanguard Growth vs. Vanguard Small Cap Growth | Vanguard Growth vs. Vanguard 500 Index |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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