Correlation Between Vanguard Municipal and Vanguard Federal
Can any of the company-specific risk be diversified away by investing in both Vanguard Municipal and Vanguard Federal 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 Municipal and Vanguard Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Municipal Bond and Vanguard Federal Money, you can compare the effects of market volatilities on Vanguard Municipal and Vanguard Federal 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 Municipal with a short position of Vanguard Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Municipal and Vanguard Federal.
Diversification Opportunities for Vanguard Municipal and Vanguard Federal
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Vanguard is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Municipal Bond and Vanguard Federal Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Federal Money and Vanguard Municipal 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 Municipal Bond are associated (or correlated) with Vanguard Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Federal Money has no effect on the direction of Vanguard Municipal i.e., Vanguard Municipal and Vanguard Federal go up and down completely randomly.
Pair Corralation between Vanguard Municipal and Vanguard Federal
If you would invest 100.00 in Vanguard Federal Money on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Vanguard Federal Money or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Municipal Bond vs. Vanguard Federal Money
Performance |
| Timeline |
| Vanguard Municipal Bond |
| Vanguard Federal Money |
Vanguard Municipal and Vanguard Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Municipal and Vanguard Federal
The main advantage of trading using opposite Vanguard Municipal and Vanguard Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Municipal position performs unexpectedly, Vanguard Federal 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 Vanguard Federal will offset losses from the drop in Vanguard Federal's long position.| Vanguard Municipal vs. Vanguard Federal Money | Vanguard Municipal vs. Nationwide Destination 2055 | Vanguard Municipal vs. Strategic Allocation Aggressive | Vanguard Municipal vs. Pimco Global Multi Asset |
| Vanguard Federal vs. T Rowe Price | Vanguard Federal vs. Angel Oak Financial | Vanguard Federal vs. Versatile Bond Portfolio | Vanguard Federal vs. Bbh Intermediate Municipal |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |