Correlation Between Vanguard Total and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Xtrackers MSCI 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 Total and Xtrackers MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Bond and Xtrackers MSCI Japan, you can compare the effects of market volatilities on Vanguard Total and Xtrackers MSCI 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 Total with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Xtrackers MSCI.
Diversification Opportunities for Vanguard Total and Xtrackers MSCI
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vanguard and Xtrackers is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and Xtrackers MSCI Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI Japan and Vanguard Total 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 Total Bond are associated (or correlated) with Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI Japan has no effect on the direction of Vanguard Total i.e., Vanguard Total and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between Vanguard Total and Xtrackers MSCI
Considering the 90-day investment horizon Vanguard Total is expected to generate 2.07 times less return on investment than Xtrackers MSCI. But when comparing it to its historical volatility, Vanguard Total Bond is 2.71 times less risky than Xtrackers MSCI. It trades about 0.05 of its potential returns per unit of risk. Xtrackers MSCI Japan is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7,265 in Xtrackers MSCI Japan on August 29, 2024 and sell it today you would earn a total of 54.00 from holding Xtrackers MSCI Japan or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Bond vs. Xtrackers MSCI Japan
Performance |
| Timeline |
| Vanguard Total Bond |
| Xtrackers MSCI Japan |
Vanguard Total and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Xtrackers MSCI
The main advantage of trading using opposite Vanguard Total and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Xtrackers MSCI 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 Xtrackers MSCI will offset losses from the drop in Xtrackers MSCI's long position.| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard Real Estate |
| Xtrackers MSCI vs. iShares Currency Hedged | Xtrackers MSCI vs. Xtrackers MSCI Europe | Xtrackers MSCI vs. Xtrackers MSCI EAFE | Xtrackers MSCI vs. WisdomTree Japan Hedged |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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