Correlation Between Vanguard Short and PIMCO Intermediate
Can any of the company-specific risk be diversified away by investing in both Vanguard Short and PIMCO Intermediate 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 Short and PIMCO Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Short Term Tax Exempt and PIMCO Intermediate Municipal, you can compare the effects of market volatilities on Vanguard Short and PIMCO Intermediate 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 Short with a short position of PIMCO Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Short and PIMCO Intermediate.
Diversification Opportunities for Vanguard Short and PIMCO Intermediate
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and PIMCO is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Short Term Tax Exempt and PIMCO Intermediate Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Intermediate and Vanguard Short 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 Short Term Tax Exempt are associated (or correlated) with PIMCO Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Intermediate has no effect on the direction of Vanguard Short i.e., Vanguard Short and PIMCO Intermediate go up and down completely randomly.
Pair Corralation between Vanguard Short and PIMCO Intermediate
Given the investment horizon of 90 days Vanguard Short is expected to generate 1.79 times less return on investment than PIMCO Intermediate. But when comparing it to its historical volatility, Vanguard Short Term Tax Exempt is 2.28 times less risky than PIMCO Intermediate. It trades about 0.15 of its potential returns per unit of risk. PIMCO Intermediate Municipal is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5,193 in PIMCO Intermediate Municipal on August 29, 2024 and sell it today you would earn a total of 46.00 from holding PIMCO Intermediate Municipal or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Short Term Tax Exempt vs. PIMCO Intermediate Municipal
Performance |
| Timeline |
| Vanguard Short Term |
| PIMCO Intermediate |
Vanguard Short and PIMCO Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Short and PIMCO Intermediate
The main advantage of trading using opposite Vanguard Short and PIMCO Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Short position performs unexpectedly, PIMCO Intermediate 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 PIMCO Intermediate will offset losses from the drop in PIMCO Intermediate's long position.| Vanguard Short vs. Vanguard Tax Exempt Bond | Vanguard Short vs. Vanguard Ultra Short Bond | Vanguard Short vs. Schwab Municipal Bond | Vanguard Short vs. Vanguard Tax Exempt Bond |
| PIMCO Intermediate vs. PIMCO Short Term | PIMCO Intermediate vs. VanEck Intermediate Muni | PIMCO Intermediate vs. VanEck Long Muni | PIMCO Intermediate vs. VanEck Short Muni |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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