Correlation Between Vanguard Intermediate and SHP ETF

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

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

Diversification Opportunities for Vanguard Intermediate and SHP ETF

0.85

Correlation Coefficient

Vanguard Intermediate  SHP ETF

Very poor diversification

The 3 months correlation between Vanguard and SHP is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Intermediate Term Bon and SHP ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHP ETF Trust and Vanguard Intermediate 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 Intermediate Term Bond are associated (or correlated) with SHP ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHP ETF Trust has no effect on the direction of Vanguard Intermediate i.e., Vanguard Intermediate and SHP ETF go up and down completely randomly.

Pair Corralation between Vanguard Intermediate and SHP ETF

Considering the 90-day investment horizon Vanguard Intermediate Term Bond is expected to generate 1.08 times more return on investment than SHP ETF. However, Vanguard Intermediate is 1.08 times more volatile than SHP ETF Trust. It trades about 0.13 of its potential returns per unit of risk. SHP ETF Trust is currently generating about 0.13 per unit of risk. If you would invest  7,419  in Vanguard Intermediate Term Bond on December 25, 2024 and sell it today you would earn a total of  183.00  from holding Vanguard Intermediate Term Bond or generate 2.47% return on investment over 90 days.

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

Vanguard Intermediate Term Bon  vs.  SHP ETF Trust

Vanguard Intermediate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Intermediate Term Bond are ranked lower than 10 (%) 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.

SHP ETF Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SHP ETF Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, SHP ETF is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Vanguard Intermediate and SHP ETF

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

The idea behind Vanguard Intermediate Term Bond and SHP ETF Trust 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..