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 Treasury 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
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Bondbloxx is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Intermediate Term Tre 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 Treasury 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 Term Treasury is expected to generate 1.61 times more return on investment than Bondbloxx ETF. However, Vanguard Intermediate is 1.61 times more volatile than Bondbloxx ETF Trust. It trades about 0.31 of its potential returns per unit of risk. Bondbloxx ETF Trust is currently generating about 0.31 per unit of risk. If you would invest 5,805 in Vanguard Intermediate Term Treasury on September 13, 2024 and sell it today you would earn a total of 78.00 from holding Vanguard Intermediate Term Treasury or generate 1.34% 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 Tre 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 Treasury 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.
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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