Correlation Between Vanguard FTSE and Legal General
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and Legal General 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 Legal General 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 Legal General UCITS, you can compare the effects of market volatilities on Vanguard FTSE and Legal General 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 Legal General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Legal General.
Diversification Opportunities for Vanguard FTSE and Legal General
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vanguard and Legal is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and Legal General UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General UCITS 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 Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General UCITS has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Legal General go up and down completely randomly.
Pair Corralation between Vanguard FTSE and Legal General
Assuming the 90 days trading horizon Vanguard FTSE is expected to generate 6.87 times less return on investment than Legal General. But when comparing it to its historical volatility, Vanguard FTSE Developed is 1.56 times less risky than Legal General. It trades about 0.03 of its potential returns per unit of risk. Legal General UCITS is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,462 in Legal General UCITS on September 12, 2024 and sell it today you would earn a total of 148.00 from holding Legal General UCITS or generate 10.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard FTSE Developed vs. Legal General UCITS
Performance |
| Timeline |
| Vanguard FTSE Developed |
| Legal General UCITS |
Vanguard FTSE and Legal General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and Legal General
The main advantage of trading using opposite Vanguard FTSE and Legal General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, Legal General 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 Legal General will offset losses from the drop in Legal General's long position.| Vanguard FTSE vs. Vanguard FTSE Developed | Vanguard FTSE vs. Vanguard FTSE Emerging | Vanguard FTSE vs. iShares Core FTSE | Vanguard FTSE vs. HSBC MSCI Japan |
| Legal General vs. Legal General UCITS | Legal General vs. LG Russell 2000 | Legal General vs. VanEck Multi Asset Growth | Legal General vs. iShares III Public |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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