Correlation Between VanEck FTSE and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both VanEck FTSE and Vanguard Total 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 VanEck FTSE and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck FTSE China and Vanguard Total Market, you can compare the effects of market volatilities on VanEck FTSE and Vanguard Total 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 VanEck FTSE with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck FTSE and Vanguard Total.
Diversification Opportunities for VanEck FTSE and Vanguard Total
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between VanEck and Vanguard is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding VanEck FTSE China and Vanguard Total Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Market and VanEck FTSE 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 VanEck FTSE China are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Market has no effect on the direction of VanEck FTSE i.e., VanEck FTSE and Vanguard Total go up and down completely randomly.
Pair Corralation between VanEck FTSE and Vanguard Total
Assuming the 90 days trading horizon VanEck FTSE is expected to generate 1.22 times less return on investment than Vanguard Total. In addition to that, VanEck FTSE is 2.23 times more volatile than Vanguard Total Market. It trades about 0.06 of its total potential returns per unit of risk. Vanguard Total Market is currently generating about 0.17 per unit of volatility. If you would invest 34,529 in Vanguard Total Market on August 25, 2024 and sell it today you would earn a total of 10,888 from holding Vanguard Total Market or generate 31.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck FTSE China vs. Vanguard Total Market
Performance |
| Timeline |
| VanEck FTSE China |
| Vanguard Total Market |
VanEck FTSE and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck FTSE and Vanguard Total
The main advantage of trading using opposite VanEck FTSE and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck FTSE position performs unexpectedly, Vanguard Total 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 Total will offset losses from the drop in Vanguard Total's long position.| VanEck FTSE vs. Betashares Asia Technology | VanEck FTSE vs. CD Private Equity | VanEck FTSE vs. BetaShares Australia 200 | VanEck FTSE vs. Australian High Interest |
| Vanguard Total vs. BetaShares Global Banks | Vanguard Total vs. Beta Shares SPASX | Vanguard Total vs. SPDR SPASX 200 | Vanguard Total vs. Vanguard Australian Property |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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