Correlation Between Federated Hermes and Vanguard Intermediate
Can any of the company-specific risk be diversified away by investing in both Federated Hermes and Vanguard Intermediate 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 Federated Hermes and Vanguard Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Hermes ETF and Vanguard Intermediate Term Bond, you can compare the effects of market volatilities on Federated Hermes and Vanguard Intermediate 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 Federated Hermes with a short position of Vanguard Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Vanguard Intermediate.
Diversification Opportunities for Federated Hermes and Vanguard Intermediate
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Federated and Vanguard is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes ETF and Vanguard Intermediate Term Bon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Intermediate and Federated Hermes 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 Federated Hermes ETF are associated (or correlated) with Vanguard Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Intermediate has no effect on the direction of Federated Hermes i.e., Federated Hermes and Vanguard Intermediate go up and down completely randomly.
Pair Corralation between Federated Hermes and Vanguard Intermediate
Given the investment horizon of 90 days Federated Hermes is expected to generate 1.03 times less return on investment than Vanguard Intermediate. But when comparing it to its historical volatility, Federated Hermes ETF is 2.36 times less risky than Vanguard Intermediate. It trades about 0.16 of its potential returns per unit of risk. Vanguard Intermediate Term Bond is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,966 in Vanguard Intermediate Term Bond on September 12, 2024 and sell it today you would earn a total of 649.00 from holding Vanguard Intermediate Term Bond or generate 9.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Hermes ETF vs. Vanguard Intermediate Term Bon
Performance |
| Timeline |
| Federated Hermes ETF |
| Vanguard Intermediate |
Federated Hermes and Vanguard Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Hermes and Vanguard Intermediate
The main advantage of trading using opposite Federated Hermes and Vanguard Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes position performs unexpectedly, Vanguard Intermediate 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 Intermediate will offset losses from the drop in Vanguard Intermediate's long position.| 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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