Correlation Between Vanguard Wellesley and High Yield
Can any of the company-specific risk be diversified away by investing in both Vanguard Wellesley and High Yield 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 Wellesley and High Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Wellesley Income and High Yield Municipal Fund, you can compare the effects of market volatilities on Vanguard Wellesley and High Yield 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 Wellesley with a short position of High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Wellesley and High Yield.
Diversification Opportunities for Vanguard Wellesley and High Yield
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and High is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Wellesley Income and High Yield Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Municipal and Vanguard Wellesley 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 Wellesley Income are associated (or correlated) with High Yield. 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 Municipal has no effect on the direction of Vanguard Wellesley i.e., Vanguard Wellesley and High Yield go up and down completely randomly.
Pair Corralation between Vanguard Wellesley and High Yield
Assuming the 90 days horizon Vanguard Wellesley Income is expected to generate 1.23 times more return on investment than High Yield. However, Vanguard Wellesley is 1.23 times more volatile than High Yield Municipal Fund. It trades about 0.32 of its potential returns per unit of risk. High Yield Municipal Fund is currently generating about -0.02 per unit of risk. If you would invest 5,995 in Vanguard Wellesley Income on November 5, 2024 and sell it today you would earn a total of 135.00 from holding Vanguard Wellesley Income or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Wellesley Income vs. High Yield Municipal Fund
Performance |
| Timeline |
| Vanguard Wellesley Income |
| High Yield Municipal |
Vanguard Wellesley and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Wellesley and High Yield
The main advantage of trading using opposite Vanguard Wellesley and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Wellesley position performs unexpectedly, High Yield 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 will offset losses from the drop in High Yield's long position.| Vanguard Wellesley vs. Vanguard Wellington Fund | Vanguard Wellesley vs. Vanguard Balanced Index | Vanguard Wellesley vs. Vanguard Wellesley Income | Vanguard Wellesley vs. Vanguard Dividend Growth |
| High Yield vs. High Yield Fund Investor | High Yield vs. Intermediate Term Tax Free Bond | High Yield vs. California High Yield Municipal | High Yield vs. T Rowe Price |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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