Correlation Between Vanguard FTSE and Virtus ETF
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and Virtus ETF 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 Virtus ETF 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 Virtus ETF Trust, you can compare the effects of market volatilities on Vanguard FTSE and Virtus ETF 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 Virtus ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Virtus ETF.
Diversification Opportunities for Vanguard FTSE and Virtus ETF
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Virtus is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and Virtus ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus ETF Trust 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 Virtus ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus ETF Trust has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Virtus ETF go up and down completely randomly.
Pair Corralation between Vanguard FTSE and Virtus ETF
Considering the 90-day investment horizon Vanguard FTSE Developed is expected to under-perform the Virtus ETF. In addition to that, Vanguard FTSE is 2.47 times more volatile than Virtus ETF Trust. It trades about -0.2 of its total potential returns per unit of risk. Virtus ETF Trust is currently generating about 0.18 per unit of volatility. If you would invest 2,176 in Virtus ETF Trust on August 30, 2024 and sell it today you would earn a total of 47.00 from holding Virtus ETF Trust or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Vanguard FTSE Developed vs. Virtus ETF Trust
Performance |
| Timeline |
| Vanguard FTSE Developed |
| Virtus ETF Trust |
Vanguard FTSE and Virtus ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and Virtus ETF
The main advantage of trading using opposite Vanguard FTSE and Virtus ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, Virtus ETF 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 Virtus ETF will offset losses from the drop in Virtus ETF'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 |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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