Correlation Between Vanguard Global and ETFS Physical
Can any of the company-specific risk be diversified away by investing in both Vanguard Global and ETFS Physical 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 Global and ETFS Physical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Global Infrastructure and ETFS Physical Gold, you can compare the effects of market volatilities on Vanguard Global and ETFS Physical 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 Global with a short position of ETFS Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Global and ETFS Physical.
Diversification Opportunities for Vanguard Global and ETFS Physical
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and ETFS is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Global Infrastructure and ETFS Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Physical Gold and Vanguard Global 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 Global Infrastructure are associated (or correlated) with ETFS Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Physical Gold has no effect on the direction of Vanguard Global i.e., Vanguard Global and ETFS Physical go up and down completely randomly.
Pair Corralation between Vanguard Global and ETFS Physical
Assuming the 90 days trading horizon Vanguard Global is expected to generate 1.86 times less return on investment than ETFS Physical. But when comparing it to its historical volatility, Vanguard Global Infrastructure is 1.19 times less risky than ETFS Physical. It trades about 0.08 of its potential returns per unit of risk. ETFS Physical Gold is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,733 in ETFS Physical Gold on September 12, 2024 and sell it today you would earn a total of 1,116 from holding ETFS Physical Gold or generate 40.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Global Infrastructure vs. ETFS Physical Gold
Performance |
| Timeline |
| Vanguard Global Infr |
| ETFS Physical Gold |
Vanguard Global and ETFS Physical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Global and ETFS Physical
The main advantage of trading using opposite Vanguard Global and ETFS Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Global position performs unexpectedly, ETFS Physical 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 ETFS Physical will offset losses from the drop in ETFS Physical's long position.| Vanguard Global vs. Vanguard Global Minimum | Vanguard Global vs. Vanguard Global Aggregate | Vanguard Global vs. Vanguard Australian Fixed | Vanguard Global vs. Vanguard Global Value |
| ETFS Physical vs. Betashares Asia Technology | ETFS Physical vs. BetaShares Australia 200 | ETFS Physical vs. Australian High Interest | ETFS Physical vs. Vanguard Global Infrastructure |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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