Correlation Between Vanguard Mega and Xtrackers
Can any of the company-specific risk be diversified away by investing in both Vanguard Mega and Xtrackers 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 Xtrackers 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 Xtrackers SP 500, you can compare the effects of market volatilities on Vanguard Mega and Xtrackers 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 Xtrackers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mega and Xtrackers.
Diversification Opportunities for Vanguard Mega and Xtrackers
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Xtrackers is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mega Cap and Xtrackers SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers SP 500 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 Xtrackers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers SP 500 has no effect on the direction of Vanguard Mega i.e., Vanguard Mega and Xtrackers go up and down completely randomly.
Pair Corralation between Vanguard Mega and Xtrackers
Considering the 90-day investment horizon Vanguard Mega Cap is expected to generate 1.15 times more return on investment than Xtrackers. However, Vanguard Mega is 1.15 times more volatile than Xtrackers SP 500. It trades about 0.12 of its potential returns per unit of risk. Xtrackers SP 500 is currently generating about 0.12 per unit of risk. If you would invest 17,941 in Vanguard Mega Cap on August 27, 2024 and sell it today you would earn a total of 15,648 from holding Vanguard Mega Cap or generate 87.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Mega Cap vs. Xtrackers SP 500
Performance |
| Timeline |
| Vanguard Mega Cap |
| Xtrackers SP 500 |
Vanguard Mega and Xtrackers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mega and Xtrackers
The main advantage of trading using opposite Vanguard Mega and Xtrackers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mega position performs unexpectedly, Xtrackers 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 Xtrackers will offset losses from the drop in Xtrackers' 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 |
| Xtrackers vs. FT Vest Equity | Xtrackers vs. Northern Lights | Xtrackers vs. Dimensional International High | Xtrackers vs. First Trust Exchange Traded |
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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