Correlation Between Vanguard Canadian and Vanguard All
Can any of the company-specific risk be diversified away by investing in both Vanguard Canadian and Vanguard All 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 Canadian and Vanguard All into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Canadian Aggregate and Vanguard All Equity ETF, you can compare the effects of market volatilities on Vanguard Canadian and Vanguard All 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 Canadian with a short position of Vanguard All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Canadian and Vanguard All.
Diversification Opportunities for Vanguard Canadian and Vanguard All
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Vanguard is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Canadian Aggregate and Vanguard All Equity ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard All Equity and Vanguard Canadian 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 Canadian Aggregate are associated (or correlated) with Vanguard All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard All Equity has no effect on the direction of Vanguard Canadian i.e., Vanguard Canadian and Vanguard All go up and down completely randomly.
Pair Corralation between Vanguard Canadian and Vanguard All
Assuming the 90 days trading horizon Vanguard Canadian is expected to generate 4.48 times less return on investment than Vanguard All. But when comparing it to its historical volatility, Vanguard Canadian Aggregate is 1.48 times less risky than Vanguard All. It trades about 0.08 of its potential returns per unit of risk. Vanguard All Equity ETF is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 4,490 in Vanguard All Equity ETF on August 29, 2024 and sell it today you would earn a total of 144.00 from holding Vanguard All Equity ETF or generate 3.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Canadian Aggregate vs. Vanguard All Equity ETF
Performance |
| Timeline |
| Vanguard Canadian |
| Vanguard All Equity |
Vanguard Canadian and Vanguard All Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Canadian and Vanguard All
The main advantage of trading using opposite Vanguard Canadian and Vanguard All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Canadian position performs unexpectedly, Vanguard All 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 All will offset losses from the drop in Vanguard All's long position.| Vanguard Canadian vs. Mackenzie Core Plus | Vanguard Canadian vs. Mackenzie Unconstrained Bond | Vanguard Canadian vs. Mackenzie Floating Rate | Vanguard Canadian vs. Mackenzie Canadian Short |
| Vanguard All vs. Vanguard FTSE Canada | Vanguard All vs. Vanguard Canadian Aggregate | Vanguard All vs. Vanguard Total Market | Vanguard All vs. Vanguard FTSE Emerging |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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