Correlation Between Vanguard Gnma and Government Bond
Can any of the company-specific risk be diversified away by investing in both Vanguard Gnma and Government Bond 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 Gnma and Government Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Gnma Fund and Government Bond Fund, you can compare the effects of market volatilities on Vanguard Gnma and Government Bond 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 Gnma with a short position of Government Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Gnma and Government Bond.
Diversification Opportunities for Vanguard Gnma and Government Bond
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and GOVERNMENT is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Gnma Fund and Government Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Government Bond and Vanguard Gnma 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 Gnma Fund are associated (or correlated) with Government Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Government Bond has no effect on the direction of Vanguard Gnma i.e., Vanguard Gnma and Government Bond go up and down completely randomly.
Pair Corralation between Vanguard Gnma and Government Bond
Assuming the 90 days horizon Vanguard Gnma Fund is expected to generate 0.89 times more return on investment than Government Bond. However, Vanguard Gnma Fund is 1.13 times less risky than Government Bond. It trades about -0.15 of its potential returns per unit of risk. Government Bond Fund is currently generating about -0.16 per unit of risk. If you would invest 944.00 in Vanguard Gnma Fund on August 31, 2024 and sell it today you would lose (19.00) from holding Vanguard Gnma Fund or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Gnma Fund vs. Government Bond Fund
Performance |
| Timeline |
| Vanguard Gnma |
| Government Bond |
Vanguard Gnma and Government Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Gnma and Government Bond
The main advantage of trading using opposite Vanguard Gnma and Government Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Gnma position performs unexpectedly, Government Bond 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 Government Bond will offset losses from the drop in Government Bond's long position.| Vanguard Gnma vs. Qs Moderate Growth | Vanguard Gnma vs. Wisdomtree Siegel Moderate | Vanguard Gnma vs. Tiaa Cref Lifestyle Moderate | Vanguard Gnma vs. Franklin Lifesmart Retirement |
| Government Bond vs. Vanguard Gnma Fund | Government Bond vs. Us Government Securities | Government Bond vs. American Funds Government | Government Bond vs. Fidelity Sai Treasury |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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