Correlation Between Vanguard and Target
Can any of the company-specific risk be diversified away by investing in both Vanguard and Target 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 Target 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 Target, you can compare the effects of market volatilities on Vanguard and Target 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 Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and Target.
Diversification Opportunities for Vanguard and Target
Modest diversification
The 3 months correlation between Vanguard and Target is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 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 Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Vanguard i.e., Vanguard and Target go up and down completely randomly.
Pair Corralation between Vanguard and Target
Considering the 90-day investment horizon Vanguard SP 500 is expected to generate 0.43 times more return on investment than Target. However, Vanguard SP 500 is 2.35 times less risky than Target. It trades about 0.13 of its potential returns per unit of risk. Target is currently generating about 0.0 per unit of risk. If you would invest 59,003 in Vanguard SP 500 on September 3, 2025 and sell it today you would earn a total of 3,626 from holding Vanguard SP 500 or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard SP 500 vs. Target
Performance |
| Timeline |
| Vanguard SP 500 |
| Target |
Vanguard and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and Target
The main advantage of trading using opposite Vanguard and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.| Vanguard vs. SPDR SP 500 | Vanguard vs. FT Vest Equity | Vanguard vs. Zillow Group Class | Vanguard vs. Northern Lights |
| Target vs. BJs Wholesale Club | Target vs. Dollar General | Target vs. Grocery Outlet Holding | Target vs. Kroger Company |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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