Correlation Between BondBloxx ETF and Vanguard Consumer

Can any of the company-specific risk be diversified away by investing in both BondBloxx ETF and Vanguard Consumer 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 Consumer 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 Consumer Discretionary, you can compare the effects of market volatilities on BondBloxx ETF and Vanguard Consumer 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 Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of BondBloxx ETF and Vanguard Consumer.

Diversification Opportunities for BondBloxx ETF and Vanguard Consumer

-0.5

Correlation Coefficient

BondBloxx ETF  Vanguard Consumer

Very good diversification

The 3 months correlation between BondBloxx and Vanguard is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding BondBloxx ETF Trust and Vanguard Consumer Discretionar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Consumer 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 Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Consumer has no effect on the direction of BondBloxx ETF i.e., BondBloxx ETF and Vanguard Consumer go up and down completely randomly.

Pair Corralation between BondBloxx ETF and Vanguard Consumer

Given the investment horizon of 90 days BondBloxx ETF is expected to generate 82.93 times less return on investment than Vanguard Consumer. But when comparing it to its historical volatility, BondBloxx ETF Trust is 3.44 times less risky than Vanguard Consumer. It trades about 0.01 of its potential returns per unit of risk. Vanguard Consumer Discretionary is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  31,976  in Vanguard Consumer Discretionary on August 30, 2024 and sell it today you would earn a total of  5,275  from holding Vanguard Consumer Discretionary or generate 16.5% return on investment over 90 days.

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

BondBloxx ETF Trust  vs.  Vanguard Consumer Discretionar

BondBloxx ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BondBloxx ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, BondBloxx ETF is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Vanguard Consumer

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Consumer Discretionary are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental indicators, Vanguard Consumer reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BondBloxx ETF and Vanguard Consumer

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

The idea behind BondBloxx ETF Trust and Vanguard Consumer Discretionary 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 Global Correlations module to find global opportunities by holding instruments from different markets.