Correlation Between BondBloxx ETF and Vanguard ESG

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

By analyzing existing cross correlation between BondBloxx ETF Trust and Vanguard ESG Corporate, you can compare the effects of market volatilities on BondBloxx ETF and Vanguard ESG 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 BondBloxx ETF with a short position of Vanguard ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of BondBloxx ETF and Vanguard ESG.

Diversification Opportunities for BondBloxx ETF and Vanguard ESG

0.94

Correlation Coefficient

BondBloxx ETF  Vanguard ESG

Almost no diversification

The 3 months correlation between BondBloxx and Vanguard is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding BondBloxx ETF Trust and Vanguard ESG Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard ESG Corporate and BondBloxx ETF 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 BondBloxx ETF Trust are associated (or correlated) with Vanguard ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard ESG Corporate has no effect on the direction of BondBloxx ETF i.e., BondBloxx ETF and Vanguard ESG go up and down completely randomly.

Pair Corralation between BondBloxx ETF and Vanguard ESG

Allowing for the 90-day total investment horizon BondBloxx ETF is expected to generate 1.03 times less return on investment than Vanguard ESG. But when comparing it to its historical volatility, BondBloxx ETF Trust is 1.25 times less risky than Vanguard ESG. It trades about 0.23 of its potential returns per unit of risk. Vanguard ESG Corporate is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  6,183  in Vanguard ESG Corporate on July 8, 2024 and sell it today you would earn a total of  229.00  from holding Vanguard ESG Corporate or generate 3.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

BondBloxx ETF Trust  vs.  Vanguard ESG Corporate

BondBloxx ETF Trust

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BondBloxx ETF Trust are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, BondBloxx ETF is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard ESG Corporate

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard ESG Corporate are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Vanguard ESG is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BondBloxx ETF and Vanguard ESG

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

The idea behind BondBloxx ETF Trust and Vanguard ESG Corporate 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 CEOs Directory module to screen CEOs from public companies around the world.