Correlation Between Vanguard Large and YieldMax Universe

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

By analyzing existing cross correlation between Vanguard Large Cap Index and YieldMax Universe, you can compare the effects of market volatilities on Vanguard Large and YieldMax Universe 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 Large with a short position of YieldMax Universe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Large and YieldMax Universe.

Diversification Opportunities for Vanguard Large and YieldMax Universe

0.95

Correlation Coefficient

Vanguard Large  YieldMax Universe

Almost no diversification

The 3 months correlation between Vanguard and YieldMax is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Large Cap Index and YieldMax Universe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YieldMax Universe and Vanguard Large 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 Large Cap Index are associated (or correlated) with YieldMax Universe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YieldMax Universe has no effect on the direction of Vanguard Large i.e., Vanguard Large and YieldMax Universe go up and down completely randomly.

Pair Corralation between Vanguard Large and YieldMax Universe

Allowing for the 90-day total investment horizon Vanguard Large is expected to generate 2.01 times less return on investment than YieldMax Universe. But when comparing it to its historical volatility, Vanguard Large Cap Index is 1.42 times less risky than YieldMax Universe. It trades about 0.21 of its potential returns per unit of risk. YieldMax Universe is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  1,512  in YieldMax Universe on September 3, 2024 and sell it today you would earn a total of  325.00  from holding YieldMax Universe or generate 21.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Vanguard Large Cap Index  vs.  YieldMax Universe

Vanguard Large Cap

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Large Cap Index are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Vanguard Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

YieldMax Universe

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in YieldMax Universe are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, YieldMax Universe showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard Large and YieldMax Universe

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

The idea behind Vanguard Large Cap Index and YieldMax Universe 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.