Correlation Between Msift High and Vanguard High-yield
Can any of the company-specific risk be diversified away by investing in both Msift High 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 Msift High 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 Msift High Yield and Vanguard High Yield Corporate, you can compare the effects of market volatilities on Msift High 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 Msift High with a short position of Vanguard High-yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Msift High and Vanguard High-yield.
Diversification Opportunities for Msift High and Vanguard High-yield
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Msift and Vanguard is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Msift High Yield and Vanguard High Yield Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard High Yield and Msift High 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 Msift High Yield 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 Msift High i.e., Msift High and Vanguard High-yield go up and down completely randomly.
Pair Corralation between Msift High and Vanguard High-yield
Assuming the 90 days horizon Msift High Yield is expected to generate 0.84 times more return on investment than Vanguard High-yield. However, Msift High Yield is 1.19 times less risky than Vanguard High-yield. It trades about 0.3 of its potential returns per unit of risk. Vanguard High Yield Corporate is currently generating about 0.22 per unit of risk. If you would invest 819.00 in Msift High Yield on September 2, 2024 and sell it today you would earn a total of 47.00 from holding Msift High Yield or generate 5.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Msift High Yield vs. Vanguard High Yield Corporate
Performance |
| Timeline |
| Msift High Yield |
| Vanguard High Yield |
Msift High and Vanguard High-yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Msift High and Vanguard High-yield
The main advantage of trading using opposite Msift High and Vanguard High-yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Msift High 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.| Msift High vs. Global Fixed Income | Msift High vs. Global E Portfolio | Msift High vs. Global E Portfolio | Msift High vs. Global E Portfolio |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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