Correlation Between Vanguard Short-term and Wabmsx

Can any of the company-specific risk be diversified away by investing in both Vanguard Short-term and Wabmsx 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 Wabmsx into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vanguard Short Term Inflation Protected and Wabmsx, you can compare the effects of market volatilities on Vanguard Short-term and Wabmsx 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 Wabmsx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Short-term and Wabmsx.

Diversification Opportunities for Vanguard Short-term and Wabmsx

0.82

Correlation Coefficient

Vanguard Short-term  Wabmsx

Very poor diversification

The 3 months correlation between Vanguard and Wabmsx is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Short Term Inflation and Wabmsx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabmsx 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 Inflation Protected are associated (or correlated) with Wabmsx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wabmsx has no effect on the direction of Vanguard Short-term i.e., Vanguard Short-term and Wabmsx go up and down completely randomly.

Pair Corralation between Vanguard Short-term and Wabmsx

Assuming the 90 days horizon Vanguard Short-term is expected to generate 4.63 times less return on investment than Wabmsx. But when comparing it to its historical volatility, Vanguard Short Term Inflation Protected is 5.53 times less risky than Wabmsx. It trades about 0.26 of its potential returns per unit of risk. Wabmsx is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,642  in Wabmsx on May 21, 2025 and sell it today you would earn a total of  127.00  from holding Wabmsx or generate 7.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Vanguard Short Term Inflation   vs.  Wabmsx

Vanguard Short Term

Risk-Adjusted Performance

Solid

Over the last 90 days Vanguard Short Term Inflation Protected has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Vanguard Short-term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wabmsx

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wabmsx are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Wabmsx may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Vanguard Short-term and Wabmsx

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

The idea behind Vanguard Short Term Inflation Protected and Wabmsx 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.