Correlation Between BBSA and Vanguard Intermediate

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

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

Diversification Opportunities for BBSA and Vanguard Intermediate

0.0

Correlation Coefficient

BBSA  Vanguard Intermediate

Pay attention - limited upside

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

Pair Corralation between BBSA and Vanguard Intermediate

If you would invest  7,401  in Vanguard Intermediate Term Bond on December 23, 2024 and sell it today you would earn a total of  237.00  from holding Vanguard Intermediate Term Bond or generate 3.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

BBSA  vs.  Vanguard Intermediate Term Bon

BBSA

Risk-Adjusted Performance

Very Weak

Over the last 90 days BBSA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BBSA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Intermediate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Intermediate Term Bond are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, Vanguard Intermediate is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with BBSA and Vanguard Intermediate

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

The idea behind BBSA and Vanguard Intermediate Term Bond 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.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.