Vanguard Fund Correlation Tool

Given today’s financial climate, diversification is the key.  As someone who holds several mutual funds, I look for Morningstar rating, past performance, risk measures (alpha, beta, R-squared, standard deviation, sharp ratio), etc.  But, if you have some Vanguard Mutual Funds, you may be interested in this Vanguard Fund Correlation Tool (it’s in the lower right column).  It allows you to determine how correlated one Vanguard Mutual Fund is to another Vanguard Mutual Fund.  For instance, Vanguard MidCap Growth Index (VMGIX) is very highly (0.97) correlated with Vanguard SmallCap Growth Index (VISGX).  So, if you’re thinking of investing some money into different Vanguard Mutual Funds (e.g. Roth IRAs) and want to diversify (i.e. achieve low correlation between funds), check out the correlation tool.  I wish there was a tool for all the mutual funds, not just Vanguard funds, and am thinking of writing the tool myself…


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