Correlation Between Vanguard Long and BBSA

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

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

Diversification Opportunities for Vanguard Long and BBSA

0.0

Correlation Coefficient

Vanguard Long  BBSA

Pay attention - limited upside

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

Pair Corralation between Vanguard Long and BBSA

If you would invest  6,820  in Vanguard Long Term Bond on December 29, 2024 and sell it today you would earn a total of  179.00  from holding Vanguard Long Term Bond or generate 2.62% return on investment over 90 days.

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

Vanguard Long Term Bond  vs.  BBSA

Vanguard Long Term

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Long Term Bond are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable essential indicators, Vanguard Long is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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.

Pair Trading with Vanguard Long and BBSA

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

The idea behind Vanguard Long Term Bond and BBSA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.