Correlation Between Global X and Vanguard FTSE
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and Vanguard FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Canadian and Vanguard FTSE Canadian, you can compare the effects of market volatilities on Global X 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 Global X with a short position of Vanguard FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Vanguard FTSE.
Diversification Opportunities for Global X and Vanguard FTSE
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Vanguard is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Global X Canadian and Vanguard FTSE Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE 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 Canadian 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 Canadian has no effect on the direction of Global X i.e., Global X and Vanguard FTSE go up and down completely randomly.
Pair Corralation between Global X and Vanguard FTSE
Assuming the 90 days trading horizon Global X is expected to generate 1.41 times less return on investment than Vanguard FTSE. In addition to that, Global X is 1.14 times more volatile than Vanguard FTSE Canadian. It trades about 0.14 of its total potential returns per unit of risk. Vanguard FTSE Canadian is currently generating about 0.22 per unit of volatility. If you would invest 4,925 in Vanguard FTSE Canadian on August 28, 2024 and sell it today you would earn a total of 129.00 from holding Vanguard FTSE Canadian or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Canadian vs. Vanguard FTSE Canadian
Performance |
| Timeline |
| Global X Canadian |
| Vanguard FTSE Canadian |
Global X and Vanguard FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Vanguard FTSE
The main advantage of trading using opposite Global X and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.| Global X vs. iShares Diversified Monthly | Global X vs. iShares SPTSX Capped | Global X vs. iShares SPTSX Capped |
| Vanguard FTSE vs. iShares SPTSX Composite | Vanguard FTSE vs. Vanguard FTSE Canadian | Vanguard FTSE vs. Vanguard SP 500 | Vanguard FTSE vs. iShares Core SPTSX |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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