Correlation Between Vanguard ESG and MYMF
Can any of the company-specific risk be diversified away by investing in both Vanguard ESG and MYMF 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 ESG and MYMF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard ESG Corporate and MYMF, you can compare the effects of market volatilities on Vanguard ESG and MYMF 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 ESG with a short position of MYMF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard ESG and MYMF.
Diversification Opportunities for Vanguard ESG and MYMF
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and MYMF is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard ESG Corporate and MYMF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYMF and Vanguard ESG 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 ESG Corporate are associated (or correlated) with MYMF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYMF has no effect on the direction of Vanguard ESG i.e., Vanguard ESG and MYMF go up and down completely randomly.
Pair Corralation between Vanguard ESG and MYMF
Given the investment horizon of 90 days Vanguard ESG Corporate is expected to generate 2.97 times more return on investment than MYMF. However, Vanguard ESG is 2.97 times more volatile than MYMF. It trades about 0.12 of its potential returns per unit of risk. MYMF is currently generating about 0.17 per unit of risk. If you would invest 6,285 in Vanguard ESG Corporate on September 4, 2024 and sell it today you would earn a total of 62.00 from holding Vanguard ESG Corporate or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard ESG Corporate vs. MYMF
Performance |
| Timeline |
| Vanguard ESG Corporate |
| MYMF |
Vanguard ESG and MYMF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard ESG and MYMF
The main advantage of trading using opposite Vanguard ESG and MYMF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard ESG position performs unexpectedly, MYMF 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 MYMF will offset losses from the drop in MYMF's long position.| Vanguard ESG vs. iShares iBoxx High | Vanguard ESG vs. iShares 1 3 Year | Vanguard ESG vs. iShares TIPS Bond | Vanguard ESG vs. iShares 7 10 Year |
| MYMF vs. VanEck Vectors Moodys | MYMF vs. Xtrackers California Municipal | MYMF vs. Vanguard ESG Corporate | MYMF vs. Vanguard Intermediate Term Corporate |
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.
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