Correlation Between Vanguard Total and Bond Fund
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Bond Fund 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 Total and Bond Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Bond and Bond Fund Class, you can compare the effects of market volatilities on Vanguard Total and Bond Fund 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 Total with a short position of Bond Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Bond Fund.
Diversification Opportunities for Vanguard Total and Bond Fund
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Bond is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and Bond Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bond Fund Class and Vanguard Total 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 Total Bond are associated (or correlated) with Bond Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bond Fund Class has no effect on the direction of Vanguard Total i.e., Vanguard Total and Bond Fund go up and down completely randomly.
Pair Corralation between Vanguard Total and Bond Fund
Assuming the 90 days horizon Vanguard Total is expected to generate 1.13 times less return on investment than Bond Fund. In addition to that, Vanguard Total is 1.07 times more volatile than Bond Fund Class. It trades about 0.07 of its total potential returns per unit of risk. Bond Fund Class is currently generating about 0.08 per unit of volatility. If you would invest 844.00 in Bond Fund Class on August 28, 2024 and sell it today you would earn a total of 5.00 from holding Bond Fund Class or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Bond vs. Bond Fund Class
Performance |
| Timeline |
| Vanguard Total Bond |
| Bond Fund Class |
Vanguard Total and Bond Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Bond Fund
The main advantage of trading using opposite Vanguard Total and Bond Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Bond Fund 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 Bond Fund will offset losses from the drop in Bond Fund's long position.| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Extended Market | Vanguard Total vs. Vanguard Small Cap Index | Vanguard Total vs. Vanguard Institutional Index |
| Bond Fund vs. Strategic Enhanced Yield | Bond Fund vs. Cavanal Hill Hedged | Bond Fund vs. Limited Duration Fund | Bond Fund vs. Cavanal Hill Ultra |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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