Correlation Between Vanguard Total and Vanguard FTSE
Can any of the company-specific risk be diversified away by investing in both Vanguard Total 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 Vanguard Total and Vanguard FTSE 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 Vanguard FTSE Canadian, you can compare the effects of market volatilities on Vanguard Total 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 Vanguard Total with a short position of Vanguard FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Vanguard FTSE.
Diversification Opportunities for Vanguard Total and Vanguard FTSE
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Vanguard is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and Vanguard FTSE Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Canadian 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 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 Canadian has no effect on the direction of Vanguard Total i.e., Vanguard Total and Vanguard FTSE go up and down completely randomly.
Pair Corralation between Vanguard Total and Vanguard FTSE
Considering the 90-day investment horizon Vanguard Total Bond is expected to under-perform the Vanguard FTSE. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Total Bond is 1.84 times less risky than Vanguard FTSE. The etf trades about -0.09 of its potential returns per unit of risk. The Vanguard FTSE Canadian is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 3,507 in Vanguard FTSE Canadian on August 25, 2024 and sell it today you would earn a total of 106.00 from holding Vanguard FTSE Canadian or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vanguard Total Bond vs. Vanguard FTSE Canadian
Performance |
| Timeline |
| Vanguard Total Bond |
| Vanguard FTSE Canadian |
Vanguard Total and Vanguard FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Vanguard FTSE
The main advantage of trading using opposite Vanguard Total and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total 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.| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard Real Estate |
| Vanguard FTSE vs. Vanguard Total Stock | Vanguard FTSE vs. SPDR SP 500 | Vanguard FTSE vs. iShares Core SP | Vanguard FTSE vs. Vanguard Total Bond |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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