Correlation Between Vanguard Total and ETF

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

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

Diversification Opportunities for Vanguard Total and ETF

0.0

Correlation Coefficient

Vanguard Total  ETF

Pay attention - limited upside

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

Pair Corralation between Vanguard Total and ETF

If you would invest (100.00) in ETF on September 16, 2024 and sell it today you would earn a total of  100.00  from holding ETF or generate -100.0% return on investment over 90 days.

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

Vanguard Total Bond  vs.  ETF

Vanguard Total Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Total Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Vanguard Total is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ETF is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vanguard Total and ETF

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

The idea behind Vanguard Total Bond and ETF 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.