Correlation Between Fuller Thaler and Vanguard Intermediate

Can any of the company-specific risk be diversified away by investing in both Fuller Thaler and Vanguard Intermediate 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 Fuller Thaler and Vanguard Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fuller Thaler Behavioral and Vanguard Intermediate Term Bond, you can compare the effects of market volatilities on Fuller Thaler and Vanguard Intermediate 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 Fuller Thaler with a short position of Vanguard Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuller Thaler and Vanguard Intermediate.

Diversification Opportunities for Fuller Thaler and Vanguard Intermediate

-0.68

Correlation Coefficient

Fuller Thaler  Vanguard Intermediate

Excellent diversification

The 3 months correlation between Fuller and Vanguard is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Fuller Thaler Behavioral and Vanguard Intermediate Term Bon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Intermediate and Fuller Thaler 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 Fuller Thaler Behavioral are associated (or correlated) with Vanguard Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Intermediate has no effect on the direction of Fuller Thaler i.e., Fuller Thaler and Vanguard Intermediate go up and down completely randomly.

Pair Corralation between Fuller Thaler and Vanguard Intermediate

Assuming the 90 days horizon Fuller Thaler Behavioral is expected to generate 4.41 times more return on investment than Vanguard Intermediate. However, Fuller Thaler is 4.41 times more volatile than Vanguard Intermediate Term Bond. It trades about 0.05 of its potential returns per unit of risk. Vanguard Intermediate Term Bond is currently generating about -0.11 per unit of risk. If you would invest  4,603  in Fuller Thaler Behavioral on September 12, 2024 and sell it today you would earn a total of  192.00  from holding Fuller Thaler Behavioral or generate 4.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Fuller Thaler Behavioral  vs.  Vanguard Intermediate Term Bon

Fuller Thaler Behavioral

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fuller Thaler Behavioral are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fuller Thaler is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Intermediate Term Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Vanguard Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fuller Thaler and Vanguard Intermediate

The main advantage of trading using opposite Fuller Thaler and Vanguard Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuller Thaler position performs unexpectedly, Vanguard Intermediate 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 Intermediate will offset losses from the drop in Vanguard Intermediate's long position.

The idea behind Fuller Thaler Behavioral and Vanguard Intermediate Term Bond pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.