Correlation Between Global X and Vanguard Momentum
Can any of the company-specific risk be diversified away by investing in both Global X and Vanguard Momentum 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 Global X and Vanguard Momentum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Cybersecurity and Vanguard Momentum Factor, you can compare the effects of market volatilities on Global X and Vanguard Momentum 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 Global X with a short position of Vanguard Momentum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Vanguard Momentum.
Diversification Opportunities for Global X and Vanguard Momentum
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Vanguard is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Global X Cybersecurity and Vanguard Momentum Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Momentum Factor and Global X 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 Global X Cybersecurity are associated (or correlated) with Vanguard Momentum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Momentum Factor has no effect on the direction of Global X i.e., Global X and Vanguard Momentum go up and down completely randomly.
Pair Corralation between Global X and Vanguard Momentum
Considering the 90-day investment horizon Global X is expected to generate 1.01 times less return on investment than Vanguard Momentum. In addition to that, Global X is 1.04 times more volatile than Vanguard Momentum Factor. It trades about 0.37 of its total potential returns per unit of risk. Vanguard Momentum Factor is currently generating about 0.39 per unit of volatility. If you would invest 16,191 in Vanguard Momentum Factor on September 1, 2024 and sell it today you would earn a total of 1,623 from holding Vanguard Momentum Factor or generate 10.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Cybersecurity vs. Vanguard Momentum Factor
Performance |
| Timeline |
| Global X Cybersecurity |
| Vanguard Momentum Factor |
Global X and Vanguard Momentum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Vanguard Momentum
The main advantage of trading using opposite Global X and Vanguard Momentum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Vanguard Momentum 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 Momentum will offset losses from the drop in Vanguard Momentum's long position.| Global X vs. Nexalin Technology | Global X vs. Kilroy Realty Corp | Global X vs. Highwoods Properties | Global X vs. Karat Packaging |
| Vanguard Momentum vs. Vanguard Quality Factor | Vanguard Momentum vs. Vanguard Multifactor | Vanguard Momentum vs. Vanguard Value Factor | Vanguard Momentum vs. Vanguard Minimum Volatility |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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