Correlation Between Vanguard Total and Global Bond
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Global 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 Total and Global Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total International and Global Bond Fund, you can compare the effects of market volatilities on Vanguard Total and Global 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 Total with a short position of Global Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Global Bond.
Diversification Opportunities for Vanguard Total and Global Bond
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and Global is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total International and Global Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Bond Fund and Vanguard Total 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 Total International are associated (or correlated) with Global Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Bond Fund has no effect on the direction of Vanguard Total i.e., Vanguard Total and Global Bond go up and down completely randomly.
Pair Corralation between Vanguard Total and Global Bond
Assuming the 90 days horizon Vanguard Total International is expected to generate 1.12 times more return on investment than Global Bond. However, Vanguard Total is 1.12 times more volatile than Global Bond Fund. It trades about 0.03 of its potential returns per unit of risk. Global Bond Fund is currently generating about -0.06 per unit of risk. If you would invest 1,993 in Vanguard Total International on August 24, 2024 and sell it today you would earn a total of 2.00 from holding Vanguard Total International or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vanguard Total International vs. Global Bond Fund
Performance |
| Timeline |
| Vanguard Total Inter |
| Global Bond Fund |
Vanguard Total and Global Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Global Bond
The main advantage of trading using opposite Vanguard Total and Global Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Global 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 Global Bond will offset losses from the drop in Global Bond's long position.The idea behind Vanguard Total International and Global Bond Fund 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.
| Global Bond vs. High Yield Fund Investor | Global Bond vs. Core Plus Fund | Global Bond vs. Diversified Bond Fund | Global Bond vs. Strategic Income Fund |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |