Correlation Between Global X and Vanguard Funds
Can any of the company-specific risk be diversified away by investing in both Global X and Vanguard Funds 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 Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Funds and Vanguard Funds Public, you can compare the effects of market volatilities on Global X and Vanguard Funds 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 Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Vanguard Funds.
Diversification Opportunities for Global X and Vanguard Funds
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Vanguard is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and Vanguard Funds Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Funds Public 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 Funds are associated (or correlated) with Vanguard Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Funds Public has no effect on the direction of Global X i.e., Global X and Vanguard Funds go up and down completely randomly.
Pair Corralation between Global X and Vanguard Funds
Given the investment horizon of 90 days Global X is expected to generate 1.23 times less return on investment than Vanguard Funds. In addition to that, Global X is 1.31 times more volatile than Vanguard Funds Public. It trades about 0.08 of its total potential returns per unit of risk. Vanguard Funds Public is currently generating about 0.12 per unit of volatility. If you would invest 10,651 in Vanguard Funds Public on August 28, 2024 and sell it today you would earn a total of 719.00 from holding Vanguard Funds Public or generate 6.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 92.19% |
| Values | Daily Returns |
Global X Funds vs. Vanguard Funds Public
Performance |
| Timeline |
| Global X Funds |
| Vanguard Funds Public |
Global X and Vanguard Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Vanguard Funds
The main advantage of trading using opposite Global X and Vanguard Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Vanguard Funds 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 Funds will offset losses from the drop in Vanguard Funds' long position.| Global X vs. First Trust Exchange Traded | Global X vs. Ultimus Managers Trust | Global X vs. Horizon Kinetics Medical | Global X vs. Harbor Health Care |
| Vanguard Funds vs. iShares Public Limited | Vanguard Funds vs. Vanguard Funds Public | Vanguard Funds vs. iShares VII Public |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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