Correlation Between Vanguard Multi-sector and Vanguard California
Can any of the company-specific risk be diversified away by investing in both Vanguard Multi-sector and Vanguard California 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 Multi-sector and Vanguard California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Multi Sector Income and Vanguard California Intermediate Term, you can compare the effects of market volatilities on Vanguard Multi-sector and Vanguard California 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 Multi-sector with a short position of Vanguard California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Multi-sector and Vanguard California.
Diversification Opportunities for Vanguard Multi-sector and Vanguard California
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Vanguard is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Multi Sector Income and Vanguard California Intermedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard California and Vanguard Multi-sector 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 Multi Sector Income are associated (or correlated) with Vanguard California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard California has no effect on the direction of Vanguard Multi-sector i.e., Vanguard Multi-sector and Vanguard California go up and down completely randomly.
Pair Corralation between Vanguard Multi-sector and Vanguard California
Assuming the 90 days horizon Vanguard Multi-sector is expected to generate 1.93 times less return on investment than Vanguard California. But when comparing it to its historical volatility, Vanguard Multi Sector Income is 1.01 times less risky than Vanguard California. It trades about 0.21 of its potential returns per unit of risk. Vanguard California Intermediate Term is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 1,120 in Vanguard California Intermediate Term on August 28, 2025 and sell it today you would earn a total of 36.00 from holding Vanguard California Intermediate Term or generate 3.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Multi Sector Income vs. Vanguard California Intermedia
Performance |
| Timeline |
| Vanguard Multi Sector |
| Vanguard California |
Vanguard Multi-sector and Vanguard California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Multi-sector and Vanguard California
The main advantage of trading using opposite Vanguard Multi-sector and Vanguard California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Multi-sector position performs unexpectedly, Vanguard California 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 California will offset losses from the drop in Vanguard California's long position.| Vanguard Multi-sector vs. Ab Municipal Bond | Vanguard Multi-sector vs. Arrow Managed Futures | Vanguard Multi-sector vs. Guggenheim Managed Futures | Vanguard Multi-sector vs. Abbey Capital Futures |
| Vanguard California vs. Federated Global Allocation | Vanguard California vs. Enhanced Large Pany | Vanguard California vs. Legg Mason Bw | Vanguard California vs. Principal Lifetime Hybrid |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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