Correlation Between Vanguard High-yield and Nasdaq 100
Can any of the company-specific risk be diversified away by investing in both Vanguard High-yield and Nasdaq 100 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 Nasdaq 100 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 Nasdaq 100 Index Fund, you can compare the effects of market volatilities on Vanguard High-yield and Nasdaq 100 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 Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard High-yield and Nasdaq 100.
Diversification Opportunities for Vanguard High-yield and Nasdaq 100
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VANGUARD and Nasdaq is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard High Yield Tax Exempt and Nasdaq 100 Index Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 Index 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 Nasdaq 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 Index has no effect on the direction of Vanguard High-yield i.e., Vanguard High-yield and Nasdaq 100 go up and down completely randomly.
Pair Corralation between Vanguard High-yield and Nasdaq 100
Assuming the 90 days horizon Vanguard High-yield is expected to generate 2.02 times less return on investment than Nasdaq 100. But when comparing it to its historical volatility, Vanguard High Yield Tax Exempt is 5.58 times less risky than Nasdaq 100. It trades about 0.36 of its potential returns per unit of risk. Nasdaq 100 Index Fund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 5,781 in Nasdaq 100 Index Fund on September 3, 2025 and sell it today you would earn a total of 506.00 from holding Nasdaq 100 Index Fund or generate 8.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard High Yield Tax Exempt vs. Nasdaq 100 Index Fund
Performance |
| Timeline |
| Vanguard High Yield |
| Nasdaq 100 Index |
Vanguard High-yield and Nasdaq 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard High-yield and Nasdaq 100
The main advantage of trading using opposite Vanguard High-yield and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard High-yield position performs unexpectedly, Nasdaq 100 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 Nasdaq 100 will offset losses from the drop in Nasdaq 100's long position.| Vanguard High-yield vs. Invesco Global Health | Vanguard High-yield vs. Allianzgi Health Sciences | Vanguard High-yield vs. Alger Health Sciences | Vanguard High-yield vs. Lord Abbett Health |
| Nasdaq 100 vs. Rbc Emerging Markets | Nasdaq 100 vs. Crafword Dividend Growth | Nasdaq 100 vs. Locorr Market Trend | Nasdaq 100 vs. Western Asset Municipal |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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