Correlation Between Vanguard FTSE and Xtrackers High
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and Xtrackers High 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 Xtrackers High 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 Xtrackers High Beta, you can compare the effects of market volatilities on Vanguard FTSE and Xtrackers High 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 Xtrackers High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Xtrackers High.
Diversification Opportunities for Vanguard FTSE and Xtrackers High
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Xtrackers is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and Xtrackers High Beta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers High Beta 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 Xtrackers High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers High Beta has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Xtrackers High go up and down completely randomly.
Pair Corralation between Vanguard FTSE and Xtrackers High
Considering the 90-day investment horizon Vanguard FTSE Developed is expected to under-perform the Xtrackers High. In addition to that, Vanguard FTSE is 3.42 times more volatile than Xtrackers High Beta. It trades about -0.13 of its total potential returns per unit of risk. Xtrackers High Beta is currently generating about 0.22 per unit of volatility. If you would invest 4,202 in Xtrackers High Beta on August 28, 2024 and sell it today you would earn a total of 44.00 from holding Xtrackers High Beta or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard FTSE Developed vs. Xtrackers High Beta
Performance |
| Timeline |
| Vanguard FTSE Developed |
| Xtrackers High Beta |
Vanguard FTSE and Xtrackers High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and Xtrackers High
The main advantage of trading using opposite Vanguard FTSE and Xtrackers High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, Xtrackers High 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 Xtrackers High will offset losses from the drop in Xtrackers High'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 |
| Xtrackers High vs. First Trust Senior | Xtrackers High vs. First Trust Low | Xtrackers High vs. First Trust Enhanced | Xtrackers High vs. First Trust TCW |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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