Correlation Between Bondbloxx ETF and Vanguard Mid

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

Diversification Opportunities for Bondbloxx ETF and Vanguard Mid

-0.64

Correlation Coefficient

Bondbloxx ETF  Vanguard Mid

Excellent diversification

The 3 months correlation between Bondbloxx and Vanguard is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bondbloxx ETF Trust and Vanguard Mid Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mid Cap 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 Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Mid Cap has no effect on the direction of Bondbloxx ETF i.e., Bondbloxx ETF and Vanguard Mid go up and down completely randomly.

Pair Corralation between Bondbloxx ETF and Vanguard Mid

Given the investment horizon of 90 days Bondbloxx ETF Trust is expected to under-perform the Vanguard Mid. In addition to that, Bondbloxx ETF is 1.37 times more volatile than Vanguard Mid Cap Index. It trades about 0.0 of its total potential returns per unit of risk. Vanguard Mid Cap Index is currently generating about 0.09 per unit of volatility. If you would invest  26,604  in Vanguard Mid Cap Index on September 12, 2024 and sell it today you would earn a total of  11,236  from holding Vanguard Mid Cap Index or generate 42.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Bondbloxx ETF Trust  vs.  Vanguard Mid Cap Index

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. In spite of latest uncertain performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Vanguard Mid Cap

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Mid Cap Index are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bondbloxx ETF and Vanguard Mid

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

The idea behind Bondbloxx ETF Trust and Vanguard Mid Cap Index 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.