Correlation Between LG ESG and Vanguard FTSE
Can any of the company-specific risk be diversified away by investing in both LG ESG 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 LG ESG and Vanguard FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG ESG Emerging and Vanguard FTSE Developed, you can compare the effects of market volatilities on LG ESG 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 LG ESG with a short position of Vanguard FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG ESG and Vanguard FTSE.
Diversification Opportunities for LG ESG and Vanguard FTSE
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EMD5 and Vanguard is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding LG ESG Emerging 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 LG ESG 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 LG ESG Emerging 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 LG ESG i.e., LG ESG and Vanguard FTSE go up and down completely randomly.
Pair Corralation between LG ESG and Vanguard FTSE
Assuming the 90 days trading horizon LG ESG Emerging is expected to generate 3.07 times more return on investment than Vanguard FTSE. However, LG ESG is 3.07 times more volatile than Vanguard FTSE Developed. It trades about 0.02 of its potential returns per unit of risk. Vanguard FTSE Developed is currently generating about 0.0 per unit of risk. If you would invest 791.00 in LG ESG Emerging on November 2, 2024 and sell it today you would earn a total of 15.00 from holding LG ESG Emerging or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
LG ESG Emerging vs. Vanguard FTSE Developed
Performance |
| Timeline |
| LG ESG Emerging |
| Vanguard FTSE Developed |
LG ESG and Vanguard FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG ESG and Vanguard FTSE
The main advantage of trading using opposite LG ESG and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG ESG 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.| LG ESG vs. Vanguard FTSE Emerging | LG ESG vs. UBS ETF MSCI | LG ESG vs. VanEck Solana ETN | LG ESG vs. iShares Corp Bond |
| Vanguard FTSE vs. Vanguard FTSE Emerging | Vanguard FTSE vs. Vanguard USD Emerging | Vanguard FTSE vs. Vanguard FTSE Japan | Vanguard FTSE vs. Vanguard EUR Eurozone |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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