Correlation Between Vanguard Reit and Bridge Builder

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

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

Diversification Opportunities for Vanguard Reit and Bridge Builder

0.55

Correlation Coefficient

Vanguard Reit  Bridge Builder

Very weak diversification

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

Pair Corralation between Vanguard Reit and Bridge Builder

Assuming the 90 days horizon Vanguard Reit is expected to generate 6.05 times less return on investment than Bridge Builder. In addition to that, Vanguard Reit is 2.83 times more volatile than Bridge Builder E. It trades about 0.01 of its total potential returns per unit of risk. Bridge Builder E is currently generating about 0.18 per unit of volatility. If you would invest  862.00  in Bridge Builder E on May 18, 2025 and sell it today you would earn a total of  30.00  from holding Bridge Builder E or generate 3.48% return on investment over 90 days.

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

Vanguard Reit Index  vs.  Bridge Builder E

Vanguard Reit Index

Risk-Adjusted Performance

Weakest

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

Bridge Builder E

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bridge Builder E are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Bridge Builder is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Reit and Bridge Builder

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

The idea behind Vanguard Reit Index and Bridge Builder E 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.