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 Developed, 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
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legal and Vanguard is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Legal General UCITS and Vanguard FTSE Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Developed 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 Developed 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 UCITS is expected to generate 2.37 times more return on investment than Vanguard FTSE. However, Legal General is 2.37 times more volatile than Vanguard FTSE Developed. It trades about -0.01 of its potential returns per unit of risk. Vanguard FTSE Developed is currently generating about -0.1 per unit of risk. If you would invest 1,570 in Legal General UCITS on September 2, 2024 and sell it today you would lose (15.00) from holding Legal General UCITS or give up 0.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legal General UCITS vs. Vanguard FTSE Developed
Performance |
| Timeline |
| Legal General UCITS |
| Vanguard FTSE Developed |
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. Vanguard FTSE Developed | Legal General vs. Leverage Shares 2x | Legal General vs. Amundi Index Solutions | Legal General vs. Amundi Index Solutions |
| Vanguard FTSE vs. Leverage Shares 2x | Vanguard FTSE vs. Amundi Index Solutions | Vanguard FTSE vs. Amundi Index Solutions | Vanguard FTSE vs. Albion Venture Capital |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |