Correlation Between Vanguard Intermediate and BondBloxx ETF
Can any of the company-specific risk be diversified away by investing in both Vanguard Intermediate and BondBloxx ETF 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 Intermediate and BondBloxx ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Intermediate Term Corporate and BondBloxx ETF Trust, you can compare the effects of market volatilities on Vanguard Intermediate and BondBloxx ETF 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 Intermediate with a short position of BondBloxx ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Intermediate and BondBloxx ETF.
Diversification Opportunities for Vanguard Intermediate and BondBloxx ETF
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and BondBloxx is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Intermediate Term Cor and BondBloxx ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BondBloxx ETF Trust and Vanguard Intermediate 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 Intermediate Term Corporate are associated (or correlated) with BondBloxx ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BondBloxx ETF Trust has no effect on the direction of Vanguard Intermediate i.e., Vanguard Intermediate and BondBloxx ETF go up and down completely randomly.
Pair Corralation between Vanguard Intermediate and BondBloxx ETF
Given the investment horizon of 90 days Vanguard Intermediate is expected to generate 1.03 times less return on investment than BondBloxx ETF. But when comparing it to its historical volatility, Vanguard Intermediate Term Corporate is 1.04 times less risky than BondBloxx ETF. It trades about 0.16 of its potential returns per unit of risk. BondBloxx ETF Trust is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 5,051 in BondBloxx ETF Trust on September 1, 2024 and sell it today you would earn a total of 72.00 from holding BondBloxx ETF Trust or generate 1.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Intermediate Term Cor vs. BondBloxx ETF Trust
Performance |
| Timeline |
| Vanguard Intermediate |
| BondBloxx ETF Trust |
Vanguard Intermediate and BondBloxx ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Intermediate and BondBloxx ETF
The main advantage of trading using opposite Vanguard Intermediate and BondBloxx ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Intermediate position performs unexpectedly, BondBloxx ETF 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 BondBloxx ETF will offset losses from the drop in BondBloxx ETF's long position.The idea behind Vanguard Intermediate Term Corporate and BondBloxx ETF Trust 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.
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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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