Correlation Between High-yield Municipal and Vanguard High-yield
Can any of the company-specific risk be diversified away by investing in both High-yield Municipal and Vanguard High-yield 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 High-yield 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 High Yield Porate, you can compare the effects of market volatilities on High-yield Municipal and Vanguard High-yield 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 High-yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Municipal and Vanguard High-yield.
Diversification Opportunities for High-yield Municipal and Vanguard High-yield
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between High-yield and Vanguard is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Vanguard High Yield Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard High Yield 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 High-yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard High Yield has no effect on the direction of High-yield Municipal i.e., High-yield Municipal and Vanguard High-yield go up and down completely randomly.
Pair Corralation between High-yield Municipal and Vanguard High-yield
Assuming the 90 days horizon High Yield Municipal Fund is expected to generate 2.67 times more return on investment than Vanguard High-yield. However, High-yield Municipal is 2.67 times more volatile than Vanguard High Yield Porate. It trades about 0.17 of its potential returns per unit of risk. Vanguard High Yield Porate is currently generating about 0.18 per unit of risk. If you would invest 891.00 in High Yield Municipal Fund on September 1, 2024 and sell it today you would earn a total of 12.00 from holding High Yield Municipal Fund or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Municipal Fund vs. Vanguard High Yield Porate
Performance |
| Timeline |
| High Yield Municipal |
| Vanguard High Yield |
High-yield Municipal and Vanguard High-yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Municipal and Vanguard High-yield
The main advantage of trading using opposite High-yield Municipal and Vanguard High-yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Municipal position performs unexpectedly, Vanguard High-yield 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 High-yield will offset losses from the drop in Vanguard High-yield'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 |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |