Question:

With version-specific relationships, Vault users can relate specific source document versions with specific target document versions to reduce compliance risk and improve the traceability of supporting materials. Does this setting apply to Vault wide?

Answer:

The version-specific document relationship setting is neither a Vault nor a document level relationship. The relationship level means it applies to any document as long as there is a relationship. 

Related Documentation:

Vault Online Help: About Version-Specific Document Relationships