Correlation Between Vanguard 500 and Cliffwater Corporate
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Cliffwater Corporate 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 500 and Cliffwater Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard 500 Index and Cliffwater Corporate Lending, you can compare the effects of market volatilities on Vanguard 500 and Cliffwater Corporate 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 500 with a short position of Cliffwater Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Cliffwater Corporate.
Diversification Opportunities for Vanguard 500 and Cliffwater Corporate
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Cliffwater is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Cliffwater Corporate Lending in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cliffwater Corporate and Vanguard 500 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 500 Index are associated (or correlated) with Cliffwater Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cliffwater Corporate has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Cliffwater Corporate go up and down completely randomly.
Pair Corralation between Vanguard 500 and Cliffwater Corporate
Assuming the 90 days horizon Vanguard 500 Index is expected to generate 12.71 times more return on investment than Cliffwater Corporate. However, Vanguard 500 is 12.71 times more volatile than Cliffwater Corporate Lending. It trades about 0.32 of its potential returns per unit of risk. Cliffwater Corporate Lending is currently generating about 0.72 per unit of risk. If you would invest 53,407 in Vanguard 500 Index on September 6, 2024 and sell it today you would earn a total of 2,541 from holding Vanguard 500 Index or generate 4.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Vanguard 500 Index vs. Cliffwater Corporate Lending
Performance |
Timeline |
Vanguard 500 Index |
Cliffwater Corporate |
Vanguard 500 and Cliffwater Corporate Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard 500 and Cliffwater Corporate
The main advantage of trading using opposite Vanguard 500 and Cliffwater Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Cliffwater Corporate 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 Cliffwater Corporate will offset losses from the drop in Cliffwater Corporate's long position.Vanguard 500 vs. Vanguard Total Stock | Vanguard 500 vs. Vanguard Mid Cap Index | Vanguard 500 vs. Vanguard Small Cap Index | Vanguard 500 vs. Vanguard Total Bond |
Cliffwater Corporate vs. Vanguard Total Stock | Cliffwater Corporate vs. Vanguard 500 Index | Cliffwater Corporate vs. Vanguard Total Stock | Cliffwater Corporate vs. Vanguard Total Stock |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Money Managers Screen money managers from public funds and ETFs managed around the world |