Correlation Between Vanguard Small and Global X
Can any of the company-specific risk be diversified away by investing in both Vanguard Small and Global X 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 Small and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Index and Global X MSCI, you can compare the effects of market volatilities on Vanguard Small and Global X 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 Small with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Global X.
Diversification Opportunities for Vanguard Small and Global X
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Global is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI and Vanguard Small 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 Small Cap Index are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X MSCI has no effect on the direction of Vanguard Small i.e., Vanguard Small and Global X go up and down completely randomly.
Pair Corralation between Vanguard Small and Global X
Allowing for the 90-day total investment horizon Vanguard Small Cap Index is expected to generate 1.0 times more return on investment than Global X. However, Vanguard Small is 1.0 times more volatile than Global X MSCI. It trades about 0.11 of its potential returns per unit of risk. Global X MSCI is currently generating about -0.01 per unit of risk. If you would invest 18,924 in Vanguard Small Cap Index on August 24, 2024 and sell it today you would earn a total of 6,454 from holding Vanguard Small Cap Index or generate 34.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Index vs. Global X MSCI
Performance |
| Timeline |
| Vanguard Small Cap |
| Global X MSCI |
Vanguard Small and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small and Global X
The main advantage of trading using opposite Vanguard Small and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Vanguard Small vs. Vanguard Mid Cap Index | Vanguard Small vs. Vanguard Small Cap Value | Vanguard Small vs. Vanguard FTSE Emerging | Vanguard Small vs. Vanguard Large Cap Index |
| Global X vs. iShares MSCI Malaysia | Global X vs. iShares MSCI Hong | Global X vs. HUMANA INC | Global X vs. SCOR PK |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |