Correlation Between Vanguard FTSE and CI International
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and CI International 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 CI International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard FTSE Developed and CI International Quality, you can compare the effects of market volatilities on Vanguard FTSE and CI International 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 CI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and CI International.
Diversification Opportunities for Vanguard FTSE and CI International
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and IQD is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and CI International Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI International Quality 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 Developed are associated (or correlated) with CI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI International Quality has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and CI International go up and down completely randomly.
Pair Corralation between Vanguard FTSE and CI International
Assuming the 90 days trading horizon Vanguard FTSE Developed is expected to generate 0.96 times more return on investment than CI International. However, Vanguard FTSE Developed is 1.04 times less risky than CI International. It trades about 0.04 of its potential returns per unit of risk. CI International Quality is currently generating about -0.03 per unit of risk. If you would invest 4,330 in Vanguard FTSE Developed on September 5, 2024 and sell it today you would earn a total of 143.00 from holding Vanguard FTSE Developed or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Vanguard FTSE Developed vs. CI International Quality
Performance |
| Timeline |
| Vanguard FTSE Developed |
| CI International Quality |
Vanguard FTSE and CI International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and CI International
The main advantage of trading using opposite Vanguard FTSE and CI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, CI International 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 CI International will offset losses from the drop in CI International's long position.| Vanguard FTSE vs. Vanguard FTSE Emerging | Vanguard FTSE vs. Vanguard FTSE Developed | Vanguard FTSE vs. Vanguard Total Market | Vanguard FTSE vs. Vanguard Canadian Aggregate |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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