Correlation Between Vanguard Developed and High-yield Fund
Can any of the company-specific risk be diversified away by investing in both Vanguard Developed and High-yield Fund 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 Developed and High-yield Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Developed Markets and High Yield Fund R6, you can compare the effects of market volatilities on Vanguard Developed and High-yield Fund 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 Developed with a short position of High-yield Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Developed and High-yield Fund.
Diversification Opportunities for Vanguard Developed and High-yield Fund
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between VANGUARD and High-yield is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Developed Markets and High Yield Fund R6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund and Vanguard Developed 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 Developed Markets are associated (or correlated) with High-yield Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Fund has no effect on the direction of Vanguard Developed i.e., Vanguard Developed and High-yield Fund go up and down completely randomly.
Pair Corralation between Vanguard Developed and High-yield Fund
Assuming the 90 days horizon Vanguard Developed Markets is expected to under-perform the High-yield Fund. In addition to that, Vanguard Developed is 4.33 times more volatile than High Yield Fund R6. It trades about -0.1 of its total potential returns per unit of risk. High Yield Fund R6 is currently generating about 0.15 per unit of volatility. If you would invest 509.00 in High Yield Fund R6 on August 31, 2024 and sell it today you would earn a total of 3.00 from holding High Yield Fund R6 or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Developed Markets vs. High Yield Fund R6
Performance |
| Timeline |
| Vanguard Developed |
| High Yield Fund |
Vanguard Developed and High-yield Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Developed and High-yield Fund
The main advantage of trading using opposite Vanguard Developed and High-yield Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Developed position performs unexpectedly, High-yield Fund 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 High-yield Fund will offset losses from the drop in High-yield Fund's long position.| Vanguard Developed vs. Vanguard Emerging Markets | Vanguard Developed vs. Vanguard Small Cap Index | Vanguard Developed vs. Vanguard Total Bond | Vanguard Developed vs. Vanguard Mid Cap Index |
| High-yield Fund vs. Sp Midcap Index | High-yield Fund vs. Calvert Developed Market | High-yield Fund vs. Vanguard Developed Markets | High-yield Fund vs. Origin Emerging Markets |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |