Correlation Between Vanguard High-yield and Lgm Risk
Can any of the company-specific risk be diversified away by investing in both Vanguard High-yield and Lgm Risk 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 High-yield and Lgm Risk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard High Yield Tax Exempt and Lgm Risk Managed, you can compare the effects of market volatilities on Vanguard High-yield and Lgm Risk 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 High-yield with a short position of Lgm Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard High-yield and Lgm Risk.
Diversification Opportunities for Vanguard High-yield and Lgm Risk
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between VANGUARD and Lgm is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard High Yield Tax Exempt and Lgm Risk Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lgm Risk Managed and Vanguard High-yield 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 High Yield Tax Exempt are associated (or correlated) with Lgm Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lgm Risk Managed has no effect on the direction of Vanguard High-yield i.e., Vanguard High-yield and Lgm Risk go up and down completely randomly.
Pair Corralation between Vanguard High-yield and Lgm Risk
Assuming the 90 days horizon Vanguard High-yield is expected to generate 1.12 times less return on investment than Lgm Risk. In addition to that, Vanguard High-yield is 1.12 times more volatile than Lgm Risk Managed. It trades about 0.14 of its total potential returns per unit of risk. Lgm Risk Managed is currently generating about 0.17 per unit of volatility. If you would invest 1,134 in Lgm Risk Managed on August 29, 2024 and sell it today you would earn a total of 15.00 from holding Lgm Risk Managed or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vanguard High Yield Tax Exempt vs. Lgm Risk Managed
Performance |
| Timeline |
| Vanguard High Yield |
| Lgm Risk Managed |
Vanguard High-yield and Lgm Risk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard High-yield and Lgm Risk
The main advantage of trading using opposite Vanguard High-yield and Lgm Risk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard High-yield position performs unexpectedly, Lgm Risk 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 Lgm Risk will offset losses from the drop in Lgm Risk's long position.The idea behind Vanguard High Yield Tax Exempt and Lgm Risk Managed 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.
| Lgm Risk vs. Tax Managed Mid Small | Lgm Risk vs. Small Cap Stock | Lgm Risk vs. Tiaa Cref Smallmid Cap Equity | Lgm Risk vs. Guggenheim Diversified Income |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |