Numerically Quantified Diversification I

We are reporting our first real case study result today. Diversification is very critical in portfolio management. However, there are no quantitative values for the diversification benefits. We are the first to quantify the diversification based on numerical values.

We used Vanguard family of funds as our first real case study. We selected 52 funds with data records over the last 10 years for this case study. We thought that the Vanguard 500 Index Fund as the base fund. The ranking of diversification benefits of the 50 funds based on the Vanguard 500 Index fund are listed below. We list them from the least diversification fund to the highest diversification fund.

Growth and Income Fund
Total Stock Market Index Fund
Growth Index Fund
Morgan Growth Fund
Value Index Fund
Life Strategy Growth Fund
Asset Allocation Fund
Equity Income Fund
Balanced Index Fund
PRIMECAP Fund
Life Strategy Moderate Growth
US Growth Fund
Windsor Fund
Windsor II Fund
STAR Fund
Strategic Equity Fund
Extended Market Index Fund
Wellington Fund
Dividend Growth Fund
Life Strategy Conservative Growth Fund
Growth Equity Fund
Small-Cap Index Fund
Health Care Fund
Global Equity Fund
Explorer Fund
Life Strategy Income Fund
Convertible Securities Fund
Wellesley Income Fund
European Stock Index Fund
International Growth Fund
Selected Value Fund
International Value Fund
Total International Stock Index Fund
Capital Opportunity Fund
Short-Term Investment-Grade Fund
High-Yield Corporate Fund
GNMA Fund
Short-Term Bond Index Fund
Energy Fund
Total Bond Market Index Fund
Intermediate-Term Investment-Grade Fund
Intermediate-Term Treasury Fund
Intermediate-Term Bond Index Fund
REIT Index Fund
Long-Term Investment-Grade Fund
Long-Term Bond Index Fund
Long-Term Treasury Fund
Emerging Markets Stock Index Fund
International Explorer Fund
Precious Metals and Mining Fund