Correlation Between Global X and Vanguard Canadian
Can any of the company-specific risk be diversified away by investing in both Global X and Vanguard Canadian 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 Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X SPTSX and Vanguard Canadian Corporate, you can compare the effects of market volatilities on Global X and Vanguard Canadian 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 Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Vanguard Canadian.
Diversification Opportunities for Global X and Vanguard Canadian
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Vanguard is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Global X SPTSX and Vanguard Canadian Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Canadian 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 SPTSX are associated (or correlated) with Vanguard Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Canadian has no effect on the direction of Global X i.e., Global X and Vanguard Canadian go up and down completely randomly.
Pair Corralation between Global X and Vanguard Canadian
Assuming the 90 days trading horizon Global X SPTSX is expected to generate 5.1 times more return on investment than Vanguard Canadian. However, Global X is 5.1 times more volatile than Vanguard Canadian Corporate. It trades about 0.04 of its potential returns per unit of risk. Vanguard Canadian Corporate is currently generating about 0.13 per unit of risk. If you would invest 3,466 in Global X SPTSX on September 1, 2024 and sell it today you would earn a total of 267.00 from holding Global X SPTSX or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Global X SPTSX vs. Vanguard Canadian Corporate
Performance |
| Timeline |
| Global X SPTSX |
| Vanguard Canadian |
Global X and Vanguard Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Vanguard Canadian
The main advantage of trading using opposite Global X and Vanguard Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Vanguard Canadian 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 Canadian will offset losses from the drop in Vanguard Canadian's long position.| Global X vs. CI Gold Giants | Global X vs. First Asset Tech | Global X vs. CI Canada Lifeco | Global X vs. Harvest Healthcare Leaders |
| Vanguard Canadian vs. Global X Active | Vanguard Canadian vs. Brompton Flaherty Crumrine | Vanguard Canadian vs. CIBC Core Fixed | Vanguard Canadian vs. BMO Aggregate Bond |
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 CEOs Directory module to screen CEOs from public companies around the world.
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