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 SP and Vanguard FTSE Canada, 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 SP and Vanguard FTSE Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Canada 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 SP 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 Canada 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 1.09 times less return on investment than Vanguard FTSE. In addition to that, Global X is 1.7 times more volatile than Vanguard FTSE Canada. It trades about 0.22 of its total potential returns per unit of risk. Vanguard FTSE Canada is currently generating about 0.41 per unit of volatility. If you would invest 5,002 in Vanguard FTSE Canada on August 31, 2024 and sell it today you would earn a total of 261.00 from holding Vanguard FTSE Canada or generate 5.22% 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 SP vs. Vanguard FTSE Canada
Performance |
| Timeline |
| Global X SP |
| Vanguard FTSE Canada |
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. Global X SPTSX | Global X vs. Vanguard FTSE Developed | Global X vs. Global X Active | Global X vs. iShares SPTSX Capped |
| Vanguard FTSE vs. iShares Core MSCI | Vanguard FTSE vs. Vanguard Total Market | Vanguard FTSE vs. iShares Core SP | Vanguard FTSE vs. Vanguard Canadian Aggregate |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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