Correlation Between Vanguard FTSE and Vanguard Global
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and Vanguard Global 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 Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard FTSE Europe and Vanguard Global Infrastructure, you can compare the effects of market volatilities on Vanguard FTSE and Vanguard Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Vanguard Global.
Diversification Opportunities for Vanguard FTSE and Vanguard Global
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Vanguard is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Europe and Vanguard Global Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Global Infr 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 Europe are associated (or correlated) with Vanguard Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Global Infr has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Vanguard Global go up and down completely randomly.
Pair Corralation between Vanguard FTSE and Vanguard Global
Assuming the 90 days trading horizon Vanguard FTSE Europe is expected to under-perform the Vanguard Global. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard FTSE Europe is 1.16 times less risky than Vanguard Global. The etf trades about -0.21 of its potential returns per unit of risk. The Vanguard Global Infrastructure is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 7,031 in Vanguard Global Infrastructure on August 29, 2024 and sell it today you would earn a total of 265.00 from holding Vanguard Global Infrastructure or generate 3.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard FTSE Europe vs. Vanguard Global Infrastructure
Performance |
| Timeline |
| Vanguard FTSE Europe |
| Vanguard Global Infr |
Vanguard FTSE and Vanguard Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and Vanguard Global
The main advantage of trading using opposite Vanguard FTSE and Vanguard Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, Vanguard Global 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 Global will offset losses from the drop in Vanguard Global's long position.| Vanguard FTSE vs. BetaShares Global Government | Vanguard FTSE vs. BetaShares Geared Australian | Vanguard FTSE vs. Global X Semiconductor | Vanguard FTSE vs. iShares UBS Government |
| Vanguard Global vs. BetaShares Geared Australian | Vanguard Global vs. BetaShares Global Robotics | Vanguard Global vs. iShares China LargeCap | Vanguard Global vs. Russell Australian Government |
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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