Correlation Between Global X and Vanguard MSCI
Can any of the company-specific risk be diversified away by investing in both Global X and Vanguard MSCI 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 MSCI 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 MSCI International, you can compare the effects of market volatilities on Global X and Vanguard MSCI 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 MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Vanguard MSCI.
Diversification Opportunities for Global X and Vanguard MSCI
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Vanguard is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Global X Semiconductor and Vanguard MSCI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard MSCI Intern 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 MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard MSCI Intern has no effect on the direction of Global X i.e., Global X and Vanguard MSCI go up and down completely randomly.
Pair Corralation between Global X and Vanguard MSCI
Assuming the 90 days trading horizon Global X Semiconductor is expected to under-perform the Vanguard MSCI. In addition to that, Global X is 1.81 times more volatile than Vanguard MSCI International. It trades about -0.1 of its total potential returns per unit of risk. Vanguard MSCI International is currently generating about 0.17 per unit of volatility. If you would invest 13,190 in Vanguard MSCI International on August 29, 2024 and sell it today you would earn a total of 406.00 from holding Vanguard MSCI International or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Semiconductor vs. Vanguard MSCI International
Performance |
| Timeline |
| Global X Semiconductor |
| Vanguard MSCI Intern |
Global X and Vanguard MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Vanguard MSCI
The main advantage of trading using opposite Global X and Vanguard MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Vanguard MSCI 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 MSCI will offset losses from the drop in Vanguard MSCI's long position.| Global X vs. BetaShares Geared Australian | Global X vs. BetaShares Global Robotics | Global X vs. iShares China LargeCap | Global X vs. Russell Australian Government |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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