Correlation Between Legal General and Vanguard FTSE
Can any of the company-specific risk be diversified away by investing in both Legal General and Vanguard FTSE 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 Legal General and Vanguard FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legal General UCITS and Vanguard FTSE North, you can compare the effects of market volatilities on Legal General and Vanguard FTSE 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 Legal General with a short position of Vanguard FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legal General and Vanguard FTSE.
Diversification Opportunities for Legal General and Vanguard FTSE
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legal and Vanguard is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Legal General UCITS and Vanguard FTSE North in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE North and Legal General 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 Legal General UCITS are associated (or correlated) with Vanguard FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE North has no effect on the direction of Legal General i.e., Legal General and Vanguard FTSE go up and down completely randomly.
Pair Corralation between Legal General and Vanguard FTSE
Assuming the 90 days trading horizon Legal General is expected to generate 2.35 times less return on investment than Vanguard FTSE. In addition to that, Legal General is 1.04 times more volatile than Vanguard FTSE North. It trades about 0.15 of its total potential returns per unit of risk. Vanguard FTSE North is currently generating about 0.36 per unit of volatility. If you would invest 12,815 in Vanguard FTSE North on September 1, 2024 and sell it today you would earn a total of 1,130 from holding Vanguard FTSE North or generate 8.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legal General UCITS vs. Vanguard FTSE North
Performance |
| Timeline |
| Legal General UCITS |
| Vanguard FTSE North |
Legal General and Vanguard FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legal General and Vanguard FTSE
The main advantage of trading using opposite Legal General and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legal General position performs unexpectedly, Vanguard FTSE 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 FTSE will offset losses from the drop in Vanguard FTSE's long position.| Legal General vs. iShares Core MSCI | Legal General vs. BlackRock ESG Multi Asset | Legal General vs. Pershing Square Holdings | Legal General vs. ASML Holding NV |
| Vanguard FTSE vs. iShares Core MSCI | Vanguard FTSE vs. BlackRock ESG Multi Asset | Vanguard FTSE vs. Pershing Square Holdings | Vanguard FTSE vs. ASML Holding NV |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |