Correlation Between Vanguard High-yield and Vanguard Intermediate-ter
Can any of the company-specific risk be diversified away by investing in both Vanguard High-yield and Vanguard Intermediate-ter 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 Vanguard Intermediate-ter into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard High Yield Corporate and Vanguard Intermediate Term Investment Grade, you can compare the effects of market volatilities on Vanguard High-yield and Vanguard Intermediate-ter 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 Vanguard Intermediate-ter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard High-yield and Vanguard Intermediate-ter.
Diversification Opportunities for Vanguard High-yield and Vanguard Intermediate-ter
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vanguard and Vanguard is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard High Yield Corporate and Vanguard Intermediate Term Inv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Intermediate-ter 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 Corporate are associated (or correlated) with Vanguard Intermediate-ter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Intermediate-ter has no effect on the direction of Vanguard High-yield i.e., Vanguard High-yield and Vanguard Intermediate-ter go up and down completely randomly.
Pair Corralation between Vanguard High-yield and Vanguard Intermediate-ter
Assuming the 90 days horizon Vanguard High Yield Corporate is expected to generate 0.49 times more return on investment than Vanguard Intermediate-ter. However, Vanguard High Yield Corporate is 2.04 times less risky than Vanguard Intermediate-ter. It trades about 0.1 of its potential returns per unit of risk. Vanguard Intermediate Term Investment Grade is currently generating about -0.11 per unit of risk. If you would invest 544.00 in Vanguard High Yield Corporate on August 23, 2024 and sell it today you would earn a total of 2.00 from holding Vanguard High Yield Corporate or generate 0.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard High Yield Corporate vs. Vanguard Intermediate Term Inv
Performance |
| Timeline |
| Vanguard High Yield |
| Vanguard Intermediate-ter |
Vanguard High-yield and Vanguard Intermediate-ter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard High-yield and Vanguard Intermediate-ter
The main advantage of trading using opposite Vanguard High-yield and Vanguard Intermediate-ter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard High-yield position performs unexpectedly, Vanguard Intermediate-ter 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 Vanguard Intermediate-ter will offset losses from the drop in Vanguard Intermediate-ter's long position.| Vanguard High-yield vs. Blackrock High Yield | Vanguard High-yield vs. HUMANA INC | Vanguard High-yield vs. Aquagold International | Vanguard High-yield vs. Barloworld Ltd ADR |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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