Correlation Between Global X and Vanguard Global
Can any of the company-specific risk be diversified away by investing in both Global X and Vanguard Global 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 Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Semiconductor and Vanguard Global Aggregate, you can compare the effects of market volatilities on Global X and Vanguard Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Vanguard Global.
Diversification Opportunities for Global X and Vanguard Global
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and Vanguard is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Global X Semiconductor and Vanguard Global Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Global Aggregate 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 Semiconductor are associated (or correlated) with Vanguard Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Global Aggregate has no effect on the direction of Global X i.e., Global X and Vanguard Global go up and down completely randomly.
Pair Corralation between Global X and Vanguard Global
Assuming the 90 days trading horizon Global X Semiconductor is expected to under-perform the Vanguard Global. In addition to that, Global X is 5.9 times more volatile than Vanguard Global Aggregate. It trades about -0.07 of its total potential returns per unit of risk. Vanguard Global Aggregate is currently generating about 0.22 per unit of volatility. If you would invest 4,186 in Vanguard Global Aggregate on September 3, 2024 and sell it today you would earn a total of 40.00 from holding Vanguard Global Aggregate or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Semiconductor vs. Vanguard Global Aggregate
Performance |
| Timeline |
| Global X Semiconductor |
| Vanguard Global Aggregate |
Global X and Vanguard Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Vanguard Global
The main advantage of trading using opposite Global X and Vanguard Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Vanguard Global 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 Global will offset losses from the drop in Vanguard Global's long position.| Global X vs. Global X Hydrogen | Global X vs. Global X Physical | Global X vs. Global X Treasury | Global X vs. Global X Physical |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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