Correlation Between Vanguard Tax and Hartford Municipal
Can any of the company-specific risk be diversified away by investing in both Vanguard Tax and Hartford 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 Tax and Hartford Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Tax Exempt Bond and Hartford Municipal Opportunities, you can compare the effects of market volatilities on Vanguard Tax and Hartford 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 Tax with a short position of Hartford Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Tax and Hartford Municipal.
Diversification Opportunities for Vanguard Tax and Hartford Municipal
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Hartford is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Tax Exempt Bond and Hartford Municipal Opportuniti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Municipal and Vanguard Tax 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 Tax Exempt Bond are associated (or correlated) with Hartford Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Municipal has no effect on the direction of Vanguard Tax i.e., Vanguard Tax and Hartford Municipal go up and down completely randomly.
Pair Corralation between Vanguard Tax and Hartford Municipal
Given the investment horizon of 90 days Vanguard Tax is expected to generate 1.22 times less return on investment than Hartford Municipal. In addition to that, Vanguard Tax is 1.02 times more volatile than Hartford Municipal Opportunities. It trades about 0.06 of its total potential returns per unit of risk. Hartford Municipal Opportunities is currently generating about 0.07 per unit of volatility. If you would invest 3,571 in Hartford Municipal Opportunities on August 24, 2024 and sell it today you would earn a total of 332.00 from holding Hartford Municipal Opportunities or generate 9.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Tax Exempt Bond vs. Hartford Municipal Opportuniti
Performance |
| Timeline |
| Vanguard Tax Exempt |
| Hartford Municipal |
Vanguard Tax and Hartford Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Tax and Hartford Municipal
The main advantage of trading using opposite Vanguard Tax and Hartford Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Tax position performs unexpectedly, Hartford 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 Hartford Municipal will offset losses from the drop in Hartford Municipal's long position.| Vanguard Tax vs. iShares National Muni | Vanguard Tax vs. Vanguard Short Term Inflation Protected | Vanguard Tax vs. Vanguard Intermediate Term Corporate | Vanguard Tax vs. Vanguard Short Term Treasury |
| Hartford Municipal vs. BlackRock Intermediate Muni | Hartford Municipal vs. SSGA Active Trust | Hartford Municipal vs. SPDR MarketAxess Investment | Hartford Municipal vs. SSGA Active Trust |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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