Correlation Between Vanguard Inflation-protec and Vanguard Short-term
Can any of the company-specific risk be diversified away by investing in both Vanguard Inflation-protec and Vanguard Short-term 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 Inflation-protec and Vanguard Short-term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Inflation Protected Securities and Vanguard Short Term Treasury, you can compare the effects of market volatilities on Vanguard Inflation-protec and Vanguard Short-term 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 Inflation-protec with a short position of Vanguard Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Inflation-protec and Vanguard Short-term.
Diversification Opportunities for Vanguard Inflation-protec and Vanguard Short-term
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Vanguard is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Inflation Protected S and Vanguard Short Term Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Short Term and Vanguard Inflation-protec 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 Inflation Protected Securities are associated (or correlated) with Vanguard Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Short Term has no effect on the direction of Vanguard Inflation-protec i.e., Vanguard Inflation-protec and Vanguard Short-term go up and down completely randomly.
Pair Corralation between Vanguard Inflation-protec and Vanguard Short-term
Assuming the 90 days horizon Vanguard Inflation Protected Securities is expected to under-perform the Vanguard Short-term. In addition to that, Vanguard Inflation-protec is 1.8 times more volatile than Vanguard Short Term Treasury. It trades about -0.16 of its total potential returns per unit of risk. Vanguard Short Term Treasury is currently generating about -0.1 per unit of volatility. If you would invest 984.00 in Vanguard Short Term Treasury on August 23, 2024 and sell it today you would lose (3.00) from holding Vanguard Short Term Treasury or give up 0.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Inflation Protected S vs. Vanguard Short Term Treasury
Performance |
| Timeline |
| Vanguard Inflation-protec |
| Vanguard Short Term |
Vanguard Inflation-protec and Vanguard Short-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Inflation-protec and Vanguard Short-term
The main advantage of trading using opposite Vanguard Inflation-protec and Vanguard Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Inflation-protec position performs unexpectedly, Vanguard Short-term 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 Short-term will offset losses from the drop in Vanguard Short-term's long position.The idea behind Vanguard Inflation Protected Securities and Vanguard Short Term Treasury pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Vanguard Short-term vs. Vanguard Short Term Federal | Vanguard Short-term vs. Vanguard Short Term Government | Vanguard Short-term vs. Fidelity Short Term Treasury | Vanguard Short-term vs. Eaton Vance Short |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |