Correlation Between Intermediate Bond and Vanguard European
Can any of the company-specific risk be diversified away by investing in both Intermediate Bond and Vanguard European 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 Intermediate Bond and Vanguard European into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intermediate Bond Fund and Vanguard European Stock, you can compare the effects of market volatilities on Intermediate Bond and Vanguard European 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 Intermediate Bond with a short position of Vanguard European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Bond and Vanguard European.
Diversification Opportunities for Intermediate Bond and Vanguard European
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Intermediate and Vanguard is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Bond Fund and Vanguard European Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard European Stock and Intermediate Bond 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 Intermediate Bond Fund are associated (or correlated) with Vanguard European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard European Stock has no effect on the direction of Intermediate Bond i.e., Intermediate Bond and Vanguard European go up and down completely randomly.
Pair Corralation between Intermediate Bond and Vanguard European
Assuming the 90 days horizon Intermediate Bond is expected to generate 36.45 times less return on investment than Vanguard European. But when comparing it to its historical volatility, Intermediate Bond Fund is 3.43 times less risky than Vanguard European. It trades about 0.0 of its potential returns per unit of risk. Vanguard European Stock is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 13,225 in Vanguard European Stock on January 24, 2024 and sell it today you would earn a total of 2,361 from holding Vanguard European Stock or generate 17.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Intermediate Bond Fund vs. Vanguard European Stock
Performance |
| Timeline |
| Intermediate Bond |
| Vanguard European Stock |
Intermediate Bond and Vanguard European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intermediate Bond and Vanguard European
The main advantage of trading using opposite Intermediate Bond and Vanguard European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Bond position performs unexpectedly, Vanguard European 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 European will offset losses from the drop in Vanguard European's long position.| Intermediate Bond vs. Income Fund Of | Intermediate Bond vs. New World Fund | Intermediate Bond vs. American Mutual Fund | Intermediate Bond vs. American Mutual Fund |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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