Correlation Between Vanguard Mega and Roundhill ETF
Can any of the company-specific risk be diversified away by investing in both Vanguard Mega and Roundhill ETF 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 Vanguard Mega and Roundhill ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Mega Cap and Roundhill ETF Trust, you can compare the effects of market volatilities on Vanguard Mega and Roundhill ETF 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 Vanguard Mega with a short position of Roundhill ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mega and Roundhill ETF.
Diversification Opportunities for Vanguard Mega and Roundhill ETF
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Roundhill is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mega Cap and Roundhill ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill ETF Trust and Vanguard Mega 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 Vanguard Mega Cap are associated (or correlated) with Roundhill ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill ETF Trust has no effect on the direction of Vanguard Mega i.e., Vanguard Mega and Roundhill ETF go up and down completely randomly.
Pair Corralation between Vanguard Mega and Roundhill ETF
Considering the 90-day investment horizon Vanguard Mega Cap is expected to generate 1.7 times more return on investment than Roundhill ETF. However, Vanguard Mega is 1.7 times more volatile than Roundhill ETF Trust. It trades about 0.14 of its potential returns per unit of risk. Roundhill ETF Trust is currently generating about -0.06 per unit of risk. If you would invest 32,456 in Vanguard Mega Cap on August 24, 2024 and sell it today you would earn a total of 1,130 from holding Vanguard Mega Cap or generate 3.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Mega Cap vs. Roundhill ETF Trust
Performance |
| Timeline |
| Vanguard Mega Cap |
| Roundhill ETF Trust |
Vanguard Mega and Roundhill ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mega and Roundhill ETF
The main advantage of trading using opposite Vanguard Mega and Roundhill ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mega position performs unexpectedly, Roundhill ETF 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 Roundhill ETF will offset losses from the drop in Roundhill ETF's long position.| Vanguard Mega vs. Vanguard Mega Cap | Vanguard Mega vs. Vanguard Mid Cap Growth | Vanguard Mega vs. Vanguard Growth Index | Vanguard Mega vs. Vanguard Small Cap Growth |
| Roundhill ETF vs. Vanguard Russell 1000 | Roundhill ETF vs. Vanguard Russell 2000 | Roundhill ETF vs. Vanguard Mega Cap | Roundhill ETF vs. Vanguard Russell 1000 |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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