Correlation Between Vanguard Intermediate and Blackrock

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

Diversification Opportunities for Vanguard Intermediate and Blackrock

-0.61

Correlation Coefficient

Vanguard Intermediate  Blackrock

Excellent diversification

The 3 months correlation between Vanguard and Blackrock is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Intermediate Term Bon and Blackrock Sm Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Sm Cap 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 Blackrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Sm Cap has no effect on the direction of Vanguard Intermediate i.e., Vanguard Intermediate and Blackrock go up and down completely randomly.

Pair Corralation between Vanguard Intermediate and Blackrock

Assuming the 90 days horizon Vanguard Intermediate Term Bond is expected to under-perform the Blackrock. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard Intermediate Term Bond is 3.96 times less risky than Blackrock. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Blackrock Sm Cap is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,418  in Blackrock Sm Cap on September 12, 2024 and sell it today you would earn a total of  294.00  from holding Blackrock Sm Cap or generate 12.16% return on investment over 90 days.

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

Vanguard Intermediate Term Bon  vs.  Blackrock Sm Cap

Vanguard Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Intermediate Term Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Vanguard Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Sm Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Sm Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Blackrock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vanguard Intermediate and Blackrock

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

The idea behind Vanguard Intermediate Term Bond and Blackrock Sm Cap 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 Transaction History module to view history of all your transactions and understand their impact on performance.