Correlation Between Vanguard Short-term and Limited Duration
Can any of the company-specific risk be diversified away by investing in both Vanguard Short-term and Limited Duration 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 Short-term and Limited Duration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Short Term Porate and Limited Duration Fund, you can compare the effects of market volatilities on Vanguard Short-term and Limited Duration 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 Short-term with a short position of Limited Duration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Short-term and Limited Duration.
Diversification Opportunities for Vanguard Short-term and Limited Duration
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Limited is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Short Term Porate and Limited Duration Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limited Duration and Vanguard Short-term 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 Short Term Porate are associated (or correlated) with Limited Duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limited Duration has no effect on the direction of Vanguard Short-term i.e., Vanguard Short-term and Limited Duration go up and down completely randomly.
Pair Corralation between Vanguard Short-term and Limited Duration
Assuming the 90 days horizon Vanguard Short Term Porate is expected to generate 0.68 times more return on investment than Limited Duration. However, Vanguard Short Term Porate is 1.48 times less risky than Limited Duration. It trades about 0.38 of its potential returns per unit of risk. Limited Duration Fund is currently generating about 0.15 per unit of risk. If you would invest 2,119 in Vanguard Short Term Porate on June 8, 2025 and sell it today you would earn a total of 56.00 from holding Vanguard Short Term Porate or generate 2.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Short Term Porate vs. Limited Duration Fund
Performance |
| Timeline |
| Vanguard Short Term |
| Limited Duration |
Vanguard Short-term and Limited Duration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Short-term and Limited Duration
The main advantage of trading using opposite Vanguard Short-term and Limited Duration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Short-term position performs unexpectedly, Limited Duration 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 Limited Duration will offset losses from the drop in Limited Duration's long position.The idea behind Vanguard Short Term Porate and Limited Duration Fund 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.
| Limited Duration vs. Bond Fund Investor | Limited Duration vs. Strategic Enhanced Yield | Limited Duration vs. Cavanal Hill Hedged | Limited Duration vs. Limited Duration Fund |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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