Correlation Between Vanguard FTSE and US Treasury
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and US Treasury 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 US Treasury 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 US Treasury 12, you can compare the effects of market volatilities on Vanguard FTSE and US Treasury 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 US Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and US Treasury.
Diversification Opportunities for Vanguard FTSE and US Treasury
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vanguard and OBIL is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and US Treasury 12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Treasury 12 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 US Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Treasury 12 has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and US Treasury go up and down completely randomly.
Pair Corralation between Vanguard FTSE and US Treasury
Considering the 90-day investment horizon Vanguard FTSE Developed is expected to generate 13.42 times more return on investment than US Treasury. However, Vanguard FTSE is 13.42 times more volatile than US Treasury 12. It trades about 0.06 of its potential returns per unit of risk. US Treasury 12 is currently generating about 0.3 per unit of risk. If you would invest 4,136 in Vanguard FTSE Developed on November 19, 2024 and sell it today you would earn a total of 1,015 from holding Vanguard FTSE Developed or generate 24.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard FTSE Developed vs. US Treasury 12
Performance |
| Timeline |
| Vanguard FTSE Developed |
| US Treasury 12 |
Vanguard FTSE and US Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and US Treasury
The main advantage of trading using opposite Vanguard FTSE and US Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, US Treasury 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 US Treasury will offset losses from the drop in US Treasury'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 |
| US Treasury vs. Rbb Fund | US Treasury vs. Rbb Fund | US Treasury vs. Rbb Fund | US Treasury vs. US Treasury 6 |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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