Correlation Between Vanguard Total and Federated Mortgage

Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Federated Mortgage 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 Total and Federated Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vanguard Total Bond and Federated Mortgage Fund, you can compare the effects of market volatilities on Vanguard Total and Federated Mortgage 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 Total with a short position of Federated Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Federated Mortgage.

Diversification Opportunities for Vanguard Total and Federated Mortgage

0.0

Correlation Coefficient

Vanguard Total  Federated Mortgage

Pay attention - limited upside

The 3 months correlation between Vanguard and Federated is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and Federated Mortgage Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mortgage and Vanguard Total 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 Total Bond are associated (or correlated) with Federated Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mortgage has no effect on the direction of Vanguard Total i.e., Vanguard Total and Federated Mortgage go up and down completely randomly.

Pair Corralation between Vanguard Total and Federated Mortgage

If you would invest  915.00  in Vanguard Total Bond on March 15, 2024 and sell it today you would earn a total of  24.00  from holding Vanguard Total Bond or generate 2.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.33%
Values	Daily Returns

Vanguard Total Bond  vs.  Federated Mortgage Fund

Vanguard Total Bond

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Bond are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Vanguard Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Federated Mortgage

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Federated Mortgage Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Federated Mortgage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Total and Federated Mortgage

The main advantage of trading using opposite Vanguard Total and Federated Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Federated Mortgage 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 Federated Mortgage will offset losses from the drop in Federated Mortgage's long position.

The idea behind Vanguard Total Bond and Federated Mortgage Fund 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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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.