Correlation Between Vanguard FTSE and ETF Series
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and ETF Series 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 ETF Series 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 ETF Series Solutions, you can compare the effects of market volatilities on Vanguard FTSE and ETF Series 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 ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and ETF Series.
Diversification Opportunities for Vanguard FTSE and ETF Series
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and ETF is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and ETF Series go up and down completely randomly.
Pair Corralation between Vanguard FTSE and ETF Series
Considering the 90-day investment horizon Vanguard FTSE is expected to generate 257.2 times less return on investment than ETF Series. But when comparing it to its historical volatility, Vanguard FTSE Developed is 125.52 times less risky than ETF Series. It trades about 0.05 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.00 in ETF Series Solutions on September 3, 2024 and sell it today you would earn a total of 2,031 from holding ETF Series Solutions or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 17.78% |
| Values | Daily Returns |
Vanguard FTSE Developed vs. ETF Series Solutions
Performance |
| Timeline |
| Vanguard FTSE Developed |
| ETF Series Solutions |
Vanguard FTSE and ETF Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and ETF Series
The main advantage of trading using opposite Vanguard FTSE and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, ETF Series 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 ETF Series will offset losses from the drop in ETF Series' 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 |
| ETF Series vs. FT Vest Equity | ETF Series vs. Northern Lights | ETF Series vs. Dimensional International High | ETF Series vs. JPMorgan Fundamental Data |
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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