Correlation Between Vanguard Intermediate-ter and The Hartford
Can any of the company-specific risk be diversified away by investing in both Vanguard Intermediate-ter and The Hartford 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 Intermediate-ter and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Intermediate Term Tax Exempt and The Hartford Municipal, you can compare the effects of market volatilities on Vanguard Intermediate-ter and The Hartford 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 Intermediate-ter with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Intermediate-ter and The Hartford.
Diversification Opportunities for Vanguard Intermediate-ter and The Hartford
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and The is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Intermediate Term Tax and The Hartford Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Municipal and Vanguard Intermediate-ter 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 Intermediate Term Tax Exempt are associated (or correlated) with The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hartford Municipal has no effect on the direction of Vanguard Intermediate-ter i.e., Vanguard Intermediate-ter and The Hartford go up and down completely randomly.
Pair Corralation between Vanguard Intermediate-ter and The Hartford
Assuming the 90 days horizon Vanguard Intermediate Term Tax Exempt is expected to generate 0.99 times more return on investment than The Hartford. However, Vanguard Intermediate Term Tax Exempt is 1.01 times less risky than The Hartford. It trades about 0.14 of its potential returns per unit of risk. The Hartford Municipal is currently generating about 0.13 per unit of risk. If you would invest 1,333 in Vanguard Intermediate Term Tax Exempt on September 3, 2024 and sell it today you would earn a total of 41.00 from holding Vanguard Intermediate Term Tax Exempt or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Intermediate Term Tax vs. The Hartford Municipal
Performance |
| Timeline |
| Vanguard Intermediate-ter |
| The Hartford Municipal |
Vanguard Intermediate-ter and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Intermediate-ter and The Hartford
The main advantage of trading using opposite Vanguard Intermediate-ter and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Intermediate-ter position performs unexpectedly, The Hartford 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 The Hartford will offset losses from the drop in The Hartford's long position.The idea behind Vanguard Intermediate Term Tax Exempt and The Hartford Municipal 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.
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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