Correlation Between Vanguard FTSE and FlexShares ESG
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and FlexShares ESG 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 FlexShares ESG 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 FlexShares ESG Climate, you can compare the effects of market volatilities on Vanguard FTSE and FlexShares ESG 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 FlexShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and FlexShares ESG.
Diversification Opportunities for Vanguard FTSE and FlexShares ESG
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and FlexShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and FlexShares ESG Climate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares ESG Climate 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 FlexShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares ESG Climate has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and FlexShares ESG go up and down completely randomly.
Pair Corralation between Vanguard FTSE and FlexShares ESG
Considering the 90-day investment horizon Vanguard FTSE Developed is expected to generate 1.03 times more return on investment than FlexShares ESG. However, Vanguard FTSE is 1.03 times more volatile than FlexShares ESG Climate. It trades about 0.06 of its potential returns per unit of risk. FlexShares ESG Climate is currently generating about 0.06 per unit of risk. If you would invest 4,456 in Vanguard FTSE Developed on August 26, 2024 and sell it today you would earn a total of 494.00 from holding Vanguard FTSE Developed or generate 11.09% 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 Developed vs. FlexShares ESG Climate
Performance |
| Timeline |
| Vanguard FTSE Developed |
| FlexShares ESG Climate |
Vanguard FTSE and FlexShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and FlexShares ESG
The main advantage of trading using opposite Vanguard FTSE and FlexShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, FlexShares ESG 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 FlexShares ESG will offset losses from the drop in FlexShares ESG's long position.| Vanguard FTSE vs. Vanguard FTSE Emerging | Vanguard FTSE vs. Vanguard Small Cap Index | Vanguard FTSE vs. Vanguard Value Index | Vanguard FTSE vs. Vanguard Small Cap Value |
| FlexShares ESG vs. Dimensional Core Equity | FlexShares ESG vs. Dimensional Emerging Core | FlexShares ESG vs. Dimensional Targeted Value | FlexShares ESG vs. Dimensional Small Cap |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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