Correlation Between Vanguard Windsor and High-yield Municipal
Can any of the company-specific risk be diversified away by investing in both Vanguard Windsor and High-yield Municipal 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 Windsor and High-yield Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Windsor Fund and High Yield Municipal Fund, you can compare the effects of market volatilities on Vanguard Windsor and High-yield Municipal 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 Windsor with a short position of High-yield Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Windsor and High-yield Municipal.
Diversification Opportunities for Vanguard Windsor and High-yield Municipal
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between VANGUARD and High-yield is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Windsor Fund 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 Windsor 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 Windsor Fund are associated (or correlated) with High-yield Municipal. 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 Windsor i.e., Vanguard Windsor and High-yield Municipal go up and down completely randomly.
Pair Corralation between Vanguard Windsor and High-yield Municipal
Assuming the 90 days horizon Vanguard Windsor Fund is expected to generate 3.02 times more return on investment than High-yield Municipal. However, Vanguard Windsor is 3.02 times more volatile than High Yield Municipal Fund. It trades about 0.12 of its potential returns per unit of risk. High Yield Municipal Fund is currently generating about 0.13 per unit of risk. If you would invest 2,215 in Vanguard Windsor Fund on September 5, 2024 and sell it today you would earn a total of 261.00 from holding Vanguard Windsor Fund or generate 11.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Windsor Fund vs. High Yield Municipal Fund
Performance |
| Timeline |
| Vanguard Windsor |
| High Yield Municipal |
Vanguard Windsor and High-yield Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Windsor and High-yield Municipal
The main advantage of trading using opposite Vanguard Windsor and High-yield Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Windsor position performs unexpectedly, High-yield Municipal 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 Municipal will offset losses from the drop in High-yield Municipal's long position.| Vanguard Windsor vs. Vanguard Explorer Fund | Vanguard Windsor vs. Vanguard Primecap Fund | Vanguard Windsor vs. Vanguard Wellington Fund | Vanguard Windsor vs. Vanguard Windsor Ii |
| High-yield Municipal vs. Rbb Fund | High-yield Municipal vs. Vanguard Windsor Fund | High-yield Municipal vs. Small Cap Stock | High-yield Municipal vs. Growth Strategy Fund |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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