Correlation Between MULTI UNITS and Vanguard FTSE
Can any of the company-specific risk be diversified away by investing in both MULTI UNITS 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 MULTI UNITS and Vanguard FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MULTI UNITS LUXEMBOURG and Vanguard FTSE Developed, you can compare the effects of market volatilities on MULTI UNITS 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 MULTI UNITS with a short position of Vanguard FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of MULTI UNITS and Vanguard FTSE.
Diversification Opportunities for MULTI UNITS and Vanguard FTSE
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between MULTI and Vanguard is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding MULTI UNITS LUXEMBOURG 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 MULTI UNITS 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 MULTI UNITS LUXEMBOURG 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 MULTI UNITS i.e., MULTI UNITS and Vanguard FTSE go up and down completely randomly.
Pair Corralation between MULTI UNITS and Vanguard FTSE
Assuming the 90 days trading horizon MULTI UNITS LUXEMBOURG is expected to generate 1.03 times more return on investment than Vanguard FTSE. However, MULTI UNITS is 1.03 times more volatile than Vanguard FTSE Developed. It trades about 0.57 of its potential returns per unit of risk. Vanguard FTSE Developed is currently generating about 0.19 per unit of risk. If you would invest 18,318 in MULTI UNITS LUXEMBOURG on November 2, 2024 and sell it today you would earn a total of 1,542 from holding MULTI UNITS LUXEMBOURG or generate 8.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
MULTI UNITS LUXEMBOURG vs. Vanguard FTSE Developed
Performance |
| Timeline |
| MULTI UNITS LUXEMBOURG |
| Vanguard FTSE Developed |
MULTI UNITS and Vanguard FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MULTI UNITS and Vanguard FTSE
The main advantage of trading using opposite MULTI UNITS and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MULTI UNITS 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.| MULTI UNITS vs. MULTI UNITS LUXEMBOURG | MULTI UNITS vs. MULTI UNITS LUXEMBOURG | MULTI UNITS vs. MULTI UNITS LUXEMBOURG |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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