Correlation Between Vanguard Multi and Vanguard Short

Can any of the company-specific risk be diversified away by investing in both Vanguard Multi and Vanguard Short 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 and Vanguard Short 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 Short Term Porate, you can compare the effects of market volatilities on Vanguard Multi and Vanguard Short 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 with a short position of Vanguard Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Multi and Vanguard Short.

Diversification Opportunities for Vanguard Multi and Vanguard Short

0.81

Correlation Coefficient

Vanguard Multi  Vanguard Short

Very poor diversification

The 3 months correlation between Vanguard and Vanguard is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Multi Sector Income and Vanguard Short Term Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Short Term and Vanguard Multi 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 Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Short Term has no effect on the direction of Vanguard Multi i.e., Vanguard Multi and Vanguard Short go up and down completely randomly.

Pair Corralation between Vanguard Multi and Vanguard Short

Assuming the 90 days horizon Vanguard Multi Sector Income is expected to generate 1.32 times more return on investment than Vanguard Short. However, Vanguard Multi is 1.32 times more volatile than Vanguard Short Term Porate. It trades about 0.15 of its potential returns per unit of risk. Vanguard Short Term Porate is currently generating about 0.15 per unit of risk. If you would invest  916.00  in Vanguard Multi Sector Income on September 13, 2025 and sell it today you would earn a total of  10.00  from holding Vanguard Multi Sector Income or generate 1.09% return on investment over 90 days.

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

Vanguard Multi Sector Income  vs.  Vanguard Short Term Porate

Vanguard Multi Sector

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Multi Sector Income are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Vanguard Multi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Short Term

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Short Term Porate are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Vanguard Short 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 Multi and Vanguard Short

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

The idea behind Vanguard Multi Sector Income and Vanguard Short Term Porate 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.