Correlation Between Vanguard Intermediate and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Vanguard Intermediate and Federated Hermes 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 Vanguard Intermediate and Federated Hermes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Intermediate Term Bond and Federated Hermes ETF, you can compare the effects of market volatilities on Vanguard Intermediate and Federated Hermes 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 Vanguard Intermediate with a short position of Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Intermediate and Federated Hermes.
Diversification Opportunities for Vanguard Intermediate and Federated Hermes
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Federated is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Intermediate Term Bon and Federated Hermes ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes ETF and Vanguard Intermediate 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 Vanguard Intermediate Term Bond are associated (or correlated) with Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes ETF has no effect on the direction of Vanguard Intermediate i.e., Vanguard Intermediate and Federated Hermes go up and down completely randomly.
Pair Corralation between Vanguard Intermediate and Federated Hermes
Considering the 90-day investment horizon Vanguard Intermediate is expected to generate 1.21 times less return on investment than Federated Hermes. In addition to that, Vanguard Intermediate is 2.32 times more volatile than Federated Hermes ETF. It trades about 0.04 of its total potential returns per unit of risk. Federated Hermes ETF is currently generating about 0.11 per unit of volatility. If you would invest 2,191 in Federated Hermes ETF on September 13, 2024 and sell it today you would earn a total of 227.05 from holding Federated Hermes ETF or generate 10.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Intermediate Term Bon vs. Federated Hermes ETF
Performance |
| Timeline |
| Vanguard Intermediate |
| Federated Hermes ETF |
Vanguard Intermediate and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Intermediate and Federated Hermes
The main advantage of trading using opposite Vanguard Intermediate and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Intermediate position performs unexpectedly, Federated Hermes 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 Federated Hermes will offset losses from the drop in Federated Hermes' long position.| Vanguard Intermediate vs. ClearShares Ultra Short Maturity | Vanguard Intermediate vs. PGIM Active High | Vanguard Intermediate vs. Pacer Trendpilot Bond | Vanguard Intermediate vs. Pacer Lunt Large |
| Federated Hermes vs. Vanguard Intermediate Term Bond | Federated Hermes vs. Vanguard Long Term Bond | Federated Hermes vs. Vanguard Short Term Corporate | Federated Hermes vs. Vanguard Total Bond |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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