Correlation Between Vanguard Explorer and High-yield Municipal
Can any of the company-specific risk be diversified away by investing in both Vanguard Explorer and High-yield Municipal 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 Explorer and High-yield Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Explorer Fund and High Yield Municipal Fund, you can compare the effects of market volatilities on Vanguard Explorer and High-yield Municipal 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 Explorer with a short position of High-yield Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Explorer and High-yield Municipal.
Diversification Opportunities for Vanguard Explorer and High-yield Municipal
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vanguard and High-yield is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Explorer Fund and High Yield Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Municipal and Vanguard Explorer 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 Explorer Fund are associated (or correlated) with High-yield Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Municipal has no effect on the direction of Vanguard Explorer i.e., Vanguard Explorer and High-yield Municipal go up and down completely randomly.
Pair Corralation between Vanguard Explorer and High-yield Municipal
Assuming the 90 days horizon Vanguard Explorer Fund is expected to generate 3.72 times more return on investment than High-yield Municipal. However, Vanguard Explorer is 3.72 times more volatile than High Yield Municipal Fund. It trades about 0.07 of its potential returns per unit of risk. High Yield Municipal Fund is currently generating about 0.07 per unit of risk. If you would invest 9,445 in Vanguard Explorer Fund on August 28, 2024 and sell it today you would earn a total of 3,791 from holding Vanguard Explorer Fund or generate 40.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Vanguard Explorer Fund vs. High Yield Municipal Fund
Performance |
| Timeline |
| Vanguard Explorer |
| High Yield Municipal |
Vanguard Explorer and High-yield Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Explorer and High-yield Municipal
The main advantage of trading using opposite Vanguard Explorer and High-yield Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Explorer position performs unexpectedly, High-yield Municipal 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 High-yield Municipal will offset losses from the drop in High-yield Municipal's long position.| Vanguard Explorer vs. Vanguard International Growth | Vanguard Explorer vs. Vanguard Windsor Ii | Vanguard Explorer vs. Vanguard Primecap Fund | Vanguard Explorer vs. Vanguard Growth Fund |
| High-yield Municipal vs. High Yield Fund Investor | High-yield Municipal vs. Intermediate Term Tax Free Bond | High-yield Municipal vs. California High Yield Municipal | High-yield Municipal vs. T Rowe Price |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |