Correlation Between Vanguard California and California Intermediate-ter
Can any of the company-specific risk be diversified away by investing in both Vanguard California and California Intermediate-ter 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 California and California Intermediate-ter into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard California Intermediate Term and California Intermediate Term Tax Free, you can compare the effects of market volatilities on Vanguard California and California Intermediate-ter 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 California with a short position of California Intermediate-ter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard California and California Intermediate-ter.
Diversification Opportunities for Vanguard California and California Intermediate-ter
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and California is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard California Intermedia and California Intermediate Term T in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Intermediate-ter and Vanguard California 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 California Intermediate Term are associated (or correlated) with California Intermediate-ter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Intermediate-ter has no effect on the direction of Vanguard California i.e., Vanguard California and California Intermediate-ter go up and down completely randomly.
Pair Corralation between Vanguard California and California Intermediate-ter
Assuming the 90 days horizon Vanguard California Intermediate Term is expected to generate 1.16 times more return on investment than California Intermediate-ter. However, Vanguard California is 1.16 times more volatile than California Intermediate Term Tax Free. It trades about 0.17 of its potential returns per unit of risk. California Intermediate Term Tax Free is currently generating about 0.18 per unit of risk. If you would invest 1,139 in Vanguard California Intermediate Term on September 3, 2024 and sell it today you would earn a total of 10.00 from holding Vanguard California Intermediate Term or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard California Intermedia vs. California Intermediate Term T
Performance |
| Timeline |
| Vanguard California |
| California Intermediate-ter |
Vanguard California and California Intermediate-ter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard California and California Intermediate-ter
The main advantage of trading using opposite Vanguard California and California Intermediate-ter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard California position performs unexpectedly, California Intermediate-ter 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 California Intermediate-ter will offset losses from the drop in California Intermediate-ter's long position.The idea behind Vanguard California Intermediate Term and California Intermediate Term Tax Free 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.
| California Intermediate-ter vs. Ppm High Yield | California Intermediate-ter vs. Guggenheim High Yield | California Intermediate-ter vs. Calvert High Yield | California Intermediate-ter vs. Gmo High Yield |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |