Correlation Between Vanguard High-yield and Multi-index 2045

Can any of the company-specific risk be diversified away by investing in both Vanguard High-yield and Multi-index 2045 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 High-yield and Multi-index 2045 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vanguard High Yield Tax Exempt and Multi Index 2045 Lifetime, you can compare the effects of market volatilities on Vanguard High-yield and Multi-index 2045 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 High-yield with a short position of Multi-index 2045. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard High-yield and Multi-index 2045.

Diversification Opportunities for Vanguard High-yield and Multi-index 2045

0.48

Correlation Coefficient

Vanguard High-yield  Multi-index 2045

Very weak diversification

The 3 months correlation between VANGUARD and Multi-index is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard High Yield Tax Exempt and Multi Index 2045 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2045 and Vanguard High-yield 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 High Yield Tax Exempt are associated (or correlated) with Multi-index 2045. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2045 has no effect on the direction of Vanguard High-yield i.e., Vanguard High-yield and Multi-index 2045 go up and down completely randomly.

Pair Corralation between Vanguard High-yield and Multi-index 2045

Assuming the 90 days horizon Vanguard High-yield is expected to generate 1.12 times less return on investment than Multi-index 2045. But when comparing it to its historical volatility, Vanguard High Yield Tax Exempt is 3.48 times less risky than Multi-index 2045. It trades about 0.4 of its potential returns per unit of risk. Multi Index 2045 Lifetime is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,585  in Multi Index 2045 Lifetime on August 30, 2025 and sell it today you would earn a total of  85.00  from holding Multi Index 2045 Lifetime or generate 5.36% return on investment over 90 days.

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

Vanguard High Yield Tax Exempt  vs.  Multi Index 2045 Lifetime

Vanguard High Yield

Risk-Adjusted Performance

High

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard High Yield Tax Exempt are ranked lower than 32 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Vanguard High-yield is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Multi Index 2045

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Index 2045 Lifetime are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Multi-index 2045 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 High-yield and Multi-index 2045

The main advantage of trading using opposite Vanguard High-yield and Multi-index 2045 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard High-yield position performs unexpectedly, Multi-index 2045 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 Multi-index 2045 will offset losses from the drop in Multi-index 2045's long position.

The idea behind Vanguard High Yield Tax Exempt and Multi Index 2045 Lifetime 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.