Correlation Between Largecap Value and Vanguard Reit

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

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

Diversification Opportunities for Largecap Value and Vanguard Reit

0.55

Correlation Coefficient

Largecap Value  Vanguard Reit

Very weak diversification

The 3 months correlation between Largecap and Vanguard is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Largecap Value Fund and Vanguard Reit Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Reit Index and Largecap Value 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 Largecap Value Fund are associated (or correlated) with Vanguard Reit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Reit Index has no effect on the direction of Largecap Value i.e., Largecap Value and Vanguard Reit go up and down completely randomly.

Pair Corralation between Largecap Value and Vanguard Reit

Assuming the 90 days horizon Largecap Value Fund is expected to generate 0.8 times more return on investment than Vanguard Reit. However, Largecap Value Fund is 1.26 times less risky than Vanguard Reit. It trades about 0.12 of its potential returns per unit of risk. Vanguard Reit Index is currently generating about 0.02 per unit of risk. If you would invest  1,912  in Largecap Value Fund on May 20, 2025 and sell it today you would earn a total of  95.00  from holding Largecap Value Fund or generate 4.97% return on investment over 90 days.

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

Largecap Value Fund  vs.  Vanguard Reit Index

Largecap Value

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Largecap Value Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Largecap Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Reit Index

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Reit Index are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Vanguard Reit is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Largecap Value and Vanguard Reit

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

The idea behind Largecap Value Fund and Vanguard Reit Index 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.