Correlation Between Vanguard Institutional and Horizon Defensive
Can any of the company-specific risk be diversified away by investing in both Vanguard Institutional and Horizon Defensive 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 Institutional and Horizon Defensive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Institutional Index and Horizon Defensive Equity, you can compare the effects of market volatilities on Vanguard Institutional and Horizon Defensive 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 Institutional with a short position of Horizon Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Institutional and Horizon Defensive.
Diversification Opportunities for Vanguard Institutional and Horizon Defensive
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Horizon is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Institutional Index and Horizon Defensive Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Defensive Equity and Vanguard Institutional 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 Institutional Index are associated (or correlated) with Horizon Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Defensive Equity has no effect on the direction of Vanguard Institutional i.e., Vanguard Institutional and Horizon Defensive go up and down completely randomly.
Pair Corralation between Vanguard Institutional and Horizon Defensive
Assuming the 90 days horizon Vanguard Institutional Index is expected to generate 1.17 times more return on investment than Horizon Defensive. However, Vanguard Institutional is 1.17 times more volatile than Horizon Defensive Equity. It trades about 0.26 of its potential returns per unit of risk. Horizon Defensive Equity is currently generating about 0.2 per unit of risk. If you would invest 48,555 in Vanguard Institutional Index on June 13, 2025 and sell it today you would earn a total of 4,666 from holding Vanguard Institutional Index or generate 9.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Institutional Index vs. Horizon Defensive Equity
Performance |
| Timeline |
| Vanguard Institutional |
| Horizon Defensive Equity |
Vanguard Institutional and Horizon Defensive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Institutional and Horizon Defensive
The main advantage of trading using opposite Vanguard Institutional and Horizon Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Institutional position performs unexpectedly, Horizon Defensive 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 Horizon Defensive will offset losses from the drop in Horizon Defensive's long position.| Vanguard Institutional vs. Vanguard Total Bond | Vanguard Institutional vs. Vanguard Small Cap Index | Vanguard Institutional vs. Vanguard Mid Cap Index | Vanguard Institutional vs. Vanguard Extended Market |
| Horizon Defensive vs. Putnam Retirement Advantage | Horizon Defensive vs. Cornerstone Moderately Aggressive | Horizon Defensive vs. Retirement Living Through | Horizon Defensive vs. Voya Target Retirement |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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