Correlation Between Vanguard FTSE and Guardian Canadian
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and Guardian Canadian 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 FTSE and Guardian Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard FTSE Canada and Guardian Canadian Focused, you can compare the effects of market volatilities on Vanguard FTSE and Guardian Canadian 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 FTSE with a short position of Guardian Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Guardian Canadian.
Diversification Opportunities for Vanguard FTSE and Guardian Canadian
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Guardian is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Canada and Guardian Canadian Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Canadian Focused and Vanguard FTSE 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 FTSE Canada are associated (or correlated) with Guardian Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Canadian Focused has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Guardian Canadian go up and down completely randomly.
Pair Corralation between Vanguard FTSE and Guardian Canadian
Assuming the 90 days trading horizon Vanguard FTSE is expected to generate 2.33 times less return on investment than Guardian Canadian. But when comparing it to its historical volatility, Vanguard FTSE Canada is 2.66 times less risky than Guardian Canadian. It trades about 0.38 of its potential returns per unit of risk. Guardian Canadian Focused is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 2,810 in Guardian Canadian Focused on September 13, 2024 and sell it today you would earn a total of 221.00 from holding Guardian Canadian Focused or generate 7.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard FTSE Canada vs. Guardian Canadian Focused
Performance |
| Timeline |
| Vanguard FTSE Canada |
| Guardian Canadian Focused |
Vanguard FTSE and Guardian Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and Guardian Canadian
The main advantage of trading using opposite Vanguard FTSE and Guardian Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, Guardian Canadian 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 Guardian Canadian will offset losses from the drop in Guardian Canadian's long position.| Vanguard FTSE vs. iShares SPTSX 60 | Vanguard FTSE vs. iShares Core SPTSX | Vanguard FTSE vs. BMO SPTSX Capped | Vanguard FTSE vs. Global X SPTSX |
| Guardian Canadian vs. Guardian Directed Equity | Guardian Canadian vs. Guardian Canadian Sector | Guardian Canadian vs. Guardian Ultra Short Canadian | Guardian Canadian vs. Guardian i3 Global |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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