Correlation Between Vanguard Inflation and Vanguard Large

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

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

Diversification Opportunities for Vanguard Inflation and Vanguard Large

0.81

Correlation Coefficient

Vanguard Inflation  Vanguard Large

Very poor diversification

The 3 months correlation between Vanguard and Vanguard is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Inflation Protected S and Vanguard Large Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Large Cap and Vanguard Inflation 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 Inflation Protected Securities are associated (or correlated) with Vanguard Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Large Cap has no effect on the direction of Vanguard Inflation i.e., Vanguard Inflation and Vanguard Large go up and down completely randomly.

Pair Corralation between Vanguard Inflation and Vanguard Large

Assuming the 90 days horizon Vanguard Inflation is expected to generate 5.2 times less return on investment than Vanguard Large. But when comparing it to its historical volatility, Vanguard Inflation Protected Securities is 2.77 times less risky than Vanguard Large. It trades about 0.12 of its potential returns per unit of risk. Vanguard Large Cap Index is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  10,454  in Vanguard Large Cap Index on May 4, 2025 and sell it today you would earn a total of  1,145  from holding Vanguard Large Cap Index or generate 10.95% return on investment over 90 days.

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

Vanguard Inflation Protected S  vs.  Vanguard Large Cap Index

Vanguard Inflation

Risk-Adjusted Performance

OK

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

Vanguard Large Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Large Cap Index are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Vanguard Large may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Vanguard Inflation and Vanguard Large

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

The idea behind Vanguard Inflation Protected Securities and Vanguard Large Cap 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.