Correlation Between Vanguard Total and Baird Aggregate
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Baird Aggregate 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 Baird Aggregate 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 Baird Aggregate Bond, you can compare the effects of market volatilities on Vanguard Total and Baird Aggregate 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 Baird Aggregate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Baird Aggregate.
Diversification Opportunities for Vanguard Total and Baird Aggregate
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Baird is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and Baird Aggregate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Aggregate Bond 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 Baird Aggregate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Aggregate Bond has no effect on the direction of Vanguard Total i.e., Vanguard Total and Baird Aggregate go up and down completely randomly.
Pair Corralation between Vanguard Total and Baird Aggregate
Assuming the 90 days horizon Vanguard Total Bond is expected to generate 0.96 times more return on investment than Baird Aggregate. However, Vanguard Total Bond is 1.04 times less risky than Baird Aggregate. It trades about 0.11 of its potential returns per unit of risk. Baird Aggregate Bond is currently generating about 0.1 per unit of risk. If you would invest 960.00 in Vanguard Total Bond on September 1, 2024 and sell it today you would earn a total of 8.00 from holding Vanguard Total Bond or generate 0.83% 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. Baird Aggregate Bond
Performance |
| Timeline |
| Vanguard Total Bond |
| Baird Aggregate Bond |
Vanguard Total and Baird Aggregate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Baird Aggregate
The main advantage of trading using opposite Vanguard Total and Baird Aggregate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Baird Aggregate 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 Baird Aggregate will offset losses from the drop in Baird Aggregate's long position.| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard 500 Index |
| Baird Aggregate vs. Metropolitan West Total | Baird Aggregate vs. Mfs Emerging Markets | Baird Aggregate vs. Jpmorgan E Bond | Baird Aggregate vs. Eaton Vance Income |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |