Correlation Between A3 Alternative and Vanguard Total

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both A3 Alternative and Vanguard Total 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 A3 Alternative and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A3 Alternative Credit and Vanguard Total Stock, you can compare the effects of market volatilities on A3 Alternative and Vanguard Total 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 A3 Alternative with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of A3 Alternative and Vanguard Total.

Diversification Opportunities for A3 Alternative and Vanguard Total

  Correlation Coefficient

Almost no diversification

The 3 months correlation between AAACX and Vanguard is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding A3 Alternative Credit and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and A3 Alternative 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 A3 Alternative Credit are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of A3 Alternative i.e., A3 Alternative and Vanguard Total go up and down completely randomly.

Pair Corralation between A3 Alternative and Vanguard Total

Assuming the 90 days horizon A3 Alternative Credit is expected to generate 0.45 times more return on investment than Vanguard Total. However, A3 Alternative Credit is 2.22 times less risky than Vanguard Total. It trades about -0.24 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about -0.15 per unit of risk. If you would invest  704.00  in A3 Alternative Credit on March 28, 2022 and sell it today you would lose (29.00)  from holding A3 Alternative Credit or give up 4.12% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
ValuesDaily Returns

A3 Alternative Credit  vs.  Vanguard Total Stock

 Performance (%) 
A3 Alternative Credit 
AAACX Performance
0 of 100
Over the last 90 days A3 Alternative Credit has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

AAACX Price Channel

Vanguard Total Stock 
Vanguard Performance
0 of 100
Over the last 90 days Vanguard Total Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long term up-swing for the fund investors.

Vanguard Price Channel

A3 Alternative and Vanguard Total Volatility Contrast

 Predicted Return Density 

Pair Trading with A3 Alternative and Vanguard Total

The main advantage of trading using opposite A3 Alternative and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A3 Alternative position performs unexpectedly, Vanguard Total 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 Total will offset losses from the drop in Vanguard Total's long position.

A3 Alternative Credit

Pair trading matchups for A3 Alternative

T Rowe vs. A3 Alternative
SP 500 vs. A3 Alternative
Principal Financial vs. A3 Alternative
GM vs. A3 Alternative
Nextera Energy vs. A3 Alternative
Visa vs. A3 Alternative
Microsoft Corp vs. A3 Alternative
Walker Dunlop vs. A3 Alternative
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against A3 Alternative as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. A3 Alternative's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, A3 Alternative's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to A3 Alternative Credit.
The idea behind A3 Alternative Credit and Vanguard Total Stock 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.

Vanguard Total Stock

Pair trading matchups for Vanguard Total

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Other Complementary Tools

Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Equity Valuation
Check real value of public entities based on technical and fundamental data
Shere Portfolio
Track or share privately all of your investments from the convenience of any device
Piotroski F Score
Get Piotroski F Score based on binary analysis strategy of nine different fundamentals
Commodity Channel Index
Use Commodity Channel Index to analyze current equity momentum