Correlation Between Global X and Vanguard USD
Can any of the company-specific risk be diversified away by investing in both Global X and Vanguard USD 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 USD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X E commerce and Vanguard USD Treasury, you can compare the effects of market volatilities on Global X and Vanguard USD 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 USD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Vanguard USD.
Diversification Opportunities for Global X and Vanguard USD
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and Vanguard is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Global X E commerce and Vanguard USD Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard USD Treasury 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 E commerce are associated (or correlated) with Vanguard USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard USD Treasury has no effect on the direction of Global X i.e., Global X and Vanguard USD go up and down completely randomly.
Pair Corralation between Global X and Vanguard USD
Assuming the 90 days trading horizon Global X E commerce is expected to generate 1.68 times more return on investment than Vanguard USD. However, Global X is 1.68 times more volatile than Vanguard USD Treasury. It trades about 0.58 of its potential returns per unit of risk. Vanguard USD Treasury is currently generating about 0.02 per unit of risk. If you would invest 1,172 in Global X E commerce on November 2, 2024 and sell it today you would earn a total of 113.00 from holding Global X E commerce or generate 9.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Global X E commerce vs. Vanguard USD Treasury
Performance |
| Timeline |
| Global X E |
| Vanguard USD Treasury |
Global X and Vanguard USD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Vanguard USD
The main advantage of trading using opposite Global X and Vanguard USD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Vanguard USD 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 USD will offset losses from the drop in Vanguard USD's long position.| Global X vs. Global X NASDAQ | Global X vs. Global X CleanTech | Global X vs. Global X Solar | Global X vs. Global X Genomics |
| Vanguard USD vs. Vanguard FTSE Emerging | Vanguard USD vs. Vanguard USD Emerging | Vanguard USD vs. Vanguard FTSE Developed | Vanguard USD vs. Vanguard FTSE Japan |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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