Correlation Between Global X and Vanguard Global
Can any of the company-specific risk be diversified away by investing in both Global X and Vanguard Global 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 Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Natural and Vanguard Global Momentum, you can compare the effects of market volatilities on Global X and Vanguard Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Vanguard Global.
Diversification Opportunities for Global X and Vanguard Global
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Vanguard is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Global X Natural and Vanguard Global Momentum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Global Momentum 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 Natural are associated (or correlated) with Vanguard Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Global Momentum has no effect on the direction of Global X i.e., Global X and Vanguard Global go up and down completely randomly.
Pair Corralation between Global X and Vanguard Global
Assuming the 90 days trading horizon Global X Natural is expected to under-perform the Vanguard Global. In addition to that, Global X is 1.8 times more volatile than Vanguard Global Momentum. It trades about -0.04 of its total potential returns per unit of risk. Vanguard Global Momentum is currently generating about 0.13 per unit of volatility. If you would invest 5,692 in Vanguard Global Momentum on September 1, 2024 and sell it today you would earn a total of 1,030 from holding Vanguard Global Momentum or generate 18.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Global X Natural vs. Vanguard Global Momentum
Performance |
| Timeline |
| Global X Natural |
| Vanguard Global Momentum |
Global X and Vanguard Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Vanguard Global
The main advantage of trading using opposite Global X and Vanguard Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Vanguard Global 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 Global will offset losses from the drop in Vanguard Global's long position.| Global X vs. Global X Crude | Global X vs. Global X Silver | Global X vs. Global X Gold | Global X vs. Global X Active |
| Vanguard Global vs. Vanguard Global Value | Vanguard Global vs. Vanguard Global Minimum | Vanguard Global vs. Vanguard FTSE Developed | Vanguard Global vs. Vanguard Dividend Appreciation |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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