Correlation Between Vanguard Pennsylvania and Municipal Bond
Can any of the company-specific risk be diversified away by investing in both Vanguard Pennsylvania and Municipal Bond 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 Pennsylvania and Municipal Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Pennsylvania Long Term and Municipal Bond Fund, you can compare the effects of market volatilities on Vanguard Pennsylvania and Municipal Bond 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 Pennsylvania with a short position of Municipal Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Pennsylvania and Municipal Bond.
Diversification Opportunities for Vanguard Pennsylvania and Municipal Bond
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Municipal is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Pennsylvania Long Ter and Municipal Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Municipal Bond and Vanguard Pennsylvania 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 Pennsylvania Long Term are associated (or correlated) with Municipal Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Municipal Bond has no effect on the direction of Vanguard Pennsylvania i.e., Vanguard Pennsylvania and Municipal Bond go up and down completely randomly.
Pair Corralation between Vanguard Pennsylvania and Municipal Bond
Assuming the 90 days horizon Vanguard Pennsylvania Long Term is expected to generate 1.04 times more return on investment than Municipal Bond. However, Vanguard Pennsylvania is 1.04 times more volatile than Municipal Bond Fund. It trades about 0.49 of its potential returns per unit of risk. Municipal Bond Fund is currently generating about 0.45 per unit of risk. If you would invest 1,021 in Vanguard Pennsylvania Long Term on July 25, 2025 and sell it today you would earn a total of 64.00 from holding Vanguard Pennsylvania Long Term or generate 6.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Pennsylvania Long Ter vs. Municipal Bond Fund
Performance |
| Timeline |
| Vanguard Pennsylvania |
| Municipal Bond |
Vanguard Pennsylvania and Municipal Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Pennsylvania and Municipal Bond
The main advantage of trading using opposite Vanguard Pennsylvania and Municipal Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Pennsylvania position performs unexpectedly, Municipal Bond 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 Municipal Bond will offset losses from the drop in Municipal Bond's long position.| Vanguard Pennsylvania vs. JPMorgan Municipal | Vanguard Pennsylvania vs. Vanguard New Jersey | Vanguard Pennsylvania vs. iShares Intermediate GovernmentCredit | Vanguard Pennsylvania vs. VanEck JP Morgan |
| Municipal Bond vs. Prudential High Yield | Municipal Bond vs. Ab High Income | Municipal Bond vs. Ab High Income | Municipal Bond vs. Franklin California High |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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