Correlation Between Vanguard FTSE and Vanguard Core
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and Vanguard Core 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 Vanguard Core 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 Vanguard Core Plus, you can compare the effects of market volatilities on Vanguard FTSE and Vanguard Core 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 Vanguard Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Vanguard Core.
Diversification Opportunities for Vanguard FTSE and Vanguard Core
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Vanguard is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and Vanguard Core Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Core Plus 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 Vanguard Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Core Plus has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Vanguard Core go up and down completely randomly.
Pair Corralation between Vanguard FTSE and Vanguard Core
Considering the 90-day investment horizon Vanguard FTSE Developed is expected to generate 2.0 times more return on investment than Vanguard Core. However, Vanguard FTSE is 2.0 times more volatile than Vanguard Core Plus. It trades about 0.13 of its potential returns per unit of risk. Vanguard Core Plus is currently generating about 0.06 per unit of risk. If you would invest 4,785 in Vanguard FTSE Developed on October 22, 2024 and sell it today you would earn a total of 72.00 from holding Vanguard FTSE Developed or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard FTSE Developed vs. Vanguard Core Plus
Performance |
| Timeline |
| Vanguard FTSE Developed |
| Vanguard Core Plus |
Vanguard FTSE and Vanguard Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and Vanguard Core
The main advantage of trading using opposite Vanguard FTSE and Vanguard Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, Vanguard Core 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 Vanguard Core will offset losses from the drop in Vanguard Core'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 |
| Vanguard Core vs. Columbia Diversified Fixed | Vanguard Core vs. Doubleline Etf Trust | Vanguard Core vs. Virtus Newfleet ABSMBS | Vanguard Core vs. Vident Core Bond |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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