Correlation Between High-yield Municipal and Vanguard
Can any of the company-specific risk be diversified away by investing in both High-yield Municipal and Vanguard 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 High-yield Municipal and Vanguard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Municipal Fund and Vanguard SP 500, you can compare the effects of market volatilities on High-yield Municipal and Vanguard 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 High-yield Municipal with a short position of Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Municipal and Vanguard.
Diversification Opportunities for High-yield Municipal and Vanguard
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between High-yield and Vanguard is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Vanguard SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP 500 and High-yield Municipal 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 High Yield Municipal Fund are associated (or correlated) with Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard SP 500 has no effect on the direction of High-yield Municipal i.e., High-yield Municipal and Vanguard go up and down completely randomly.
Pair Corralation between High-yield Municipal and Vanguard
Assuming the 90 days horizon High-yield Municipal is expected to generate 5.72 times less return on investment than Vanguard. But when comparing it to its historical volatility, High Yield Municipal Fund is 2.61 times less risky than Vanguard. It trades about 0.07 of its potential returns per unit of risk. Vanguard SP 500 is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 51,162 in Vanguard SP 500 on August 29, 2024 and sell it today you would earn a total of 4,069 from holding Vanguard SP 500 or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Municipal Fund vs. Vanguard SP 500
Performance |
| Timeline |
| High Yield Municipal |
| Vanguard SP 500 |
High-yield Municipal and Vanguard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Municipal and Vanguard
The main advantage of trading using opposite High-yield Municipal and Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Municipal position performs unexpectedly, Vanguard 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 will offset losses from the drop in Vanguard's long position.| High-yield Municipal vs. High Yield Fund Investor | High-yield Municipal vs. Intermediate Term Tax Free Bond | High-yield Municipal vs. California High Yield Municipal | High-yield Municipal vs. T Rowe Price |
| Vanguard vs. Vanguard Total Stock | Vanguard vs. Vanguard High Dividend | Vanguard vs. Vanguard Information Technology | Vanguard vs. Invesco QQQ Trust |
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 the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |