Correlation Between Vanguard FTSE and Vanguard ESG
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and Vanguard 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 Vanguard 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 Vanguard ESG International, you can compare the effects of market volatilities on Vanguard FTSE and Vanguard 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 Vanguard ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Vanguard ESG.
Diversification Opportunities for Vanguard FTSE and Vanguard ESG
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Vanguard is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and Vanguard ESG International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard ESG Interna 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 ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard ESG Interna has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Vanguard ESG go up and down completely randomly.
Pair Corralation between Vanguard FTSE and Vanguard ESG
Considering the 90-day investment horizon Vanguard FTSE Developed is expected to generate 0.91 times more return on investment than Vanguard ESG. However, Vanguard FTSE Developed is 1.09 times less risky than Vanguard ESG. It trades about -0.13 of its potential returns per unit of risk. Vanguard ESG International is currently generating about -0.14 per unit of risk. If you would invest 5,088 in Vanguard FTSE Developed on August 28, 2024 and sell it today you would lose (114.00) from holding Vanguard FTSE Developed or give up 2.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard FTSE Developed vs. Vanguard ESG International
Performance |
| Timeline |
| Vanguard FTSE Developed |
| Vanguard ESG Interna |
Vanguard FTSE and Vanguard ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and Vanguard ESG
The main advantage of trading using opposite Vanguard FTSE and Vanguard ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, Vanguard 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 Vanguard ESG will offset losses from the drop in Vanguard 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 |
| Vanguard ESG vs. Vanguard ESG Stock | Vanguard ESG vs. Vanguard ESG Corporate | Vanguard ESG vs. Vanguard International Dividend | Vanguard ESG vs. iShares ESG Aware |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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