Correlation Between Vanguard FTSE and Vanguard Total

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and Vanguard Total 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 Vanguard Total 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 Vanguard Total Market, you can compare the effects of market volatilities on Vanguard FTSE and Vanguard Total 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 Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Vanguard Total.

Diversification Opportunities for Vanguard FTSE and Vanguard Total

0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Vanguard and Vanguard is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Canada and Vanguard Total Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Market 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 Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Market has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Vanguard Total go up and down completely randomly.

Pair Corralation between Vanguard FTSE and Vanguard Total

Assuming the 90 days trading horizon Vanguard FTSE is expected to generate 1.13 times less return on investment than Vanguard Total. But when comparing it to its historical volatility, Vanguard FTSE Canada is 1.21 times less risky than Vanguard Total. It trades about 0.15 of its potential returns per unit of risk. Vanguard Total Market is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  7,525  in Vanguard Total Market on September 26, 2024 and sell it today you would earn a total of  3,017  from holding Vanguard Total Market or generate 40.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Vanguard FTSE Canada  vs.  Vanguard Total Market

 Performance 
       Timeline  
Vanguard FTSE Canada 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE Canada are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Vanguard FTSE is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Vanguard Total Market 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Market are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Vanguard Total is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Vanguard FTSE and Vanguard Total Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vanguard FTSE and Vanguard Total

The main advantage of trading using opposite Vanguard FTSE and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, Vanguard Total 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 Total will offset losses from the drop in Vanguard Total's long position.
The idea behind Vanguard FTSE Canada and Vanguard Total Market pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

Other Complementary Tools

Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Transaction History
View history of all your transactions and understand their impact on performance
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Piotroski F Score
Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities