Correlation Between Bondbloxx ETF and Vanguard Developed

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

Diversification Opportunities for Bondbloxx ETF and Vanguard Developed

0.68

Correlation Coefficient

Bondbloxx ETF  Vanguard Developed

Poor diversification

The 3 months correlation between Bondbloxx and Vanguard is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bondbloxx ETF Trust and Vanguard Developed Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Developed 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 Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Developed has no effect on the direction of Bondbloxx ETF i.e., Bondbloxx ETF and Vanguard Developed go up and down completely randomly.

Pair Corralation between Bondbloxx ETF and Vanguard Developed

Given the investment horizon of 90 days Bondbloxx ETF is expected to generate 2.56 times less return on investment than Vanguard Developed. But when comparing it to its historical volatility, Bondbloxx ETF Trust is 6.07 times less risky than Vanguard Developed. It trades about 0.15 of its potential returns per unit of risk. Vanguard Developed Markets is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,385  in Vanguard Developed Markets on September 12, 2024 and sell it today you would earn a total of  241.00  from holding Vanguard Developed Markets or generate 17.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.7%
Values	Daily Returns

Bondbloxx ETF Trust  vs.  Vanguard Developed Markets

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 very healthy basic indicators, Bondbloxx ETF is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Vanguard Developed

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bondbloxx ETF and Vanguard Developed

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

The idea behind Bondbloxx ETF Trust and Vanguard Developed Markets 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.