Correlation Between Vanguard FTSE and VanEck AEX
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and VanEck AEX 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 VanEck AEX 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 VanEck AEX UCITS, you can compare the effects of market volatilities on Vanguard FTSE and VanEck AEX 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 VanEck AEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and VanEck AEX.
Diversification Opportunities for Vanguard FTSE and VanEck AEX
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and VanEck is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and VanEck AEX UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck AEX 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 VanEck AEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck AEX UCITS has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and VanEck AEX go up and down completely randomly.
Pair Corralation between Vanguard FTSE and VanEck AEX
Assuming the 90 days trading horizon Vanguard FTSE Developed is expected to generate 0.85 times more return on investment than VanEck AEX. However, Vanguard FTSE Developed is 1.17 times less risky than VanEck AEX. It trades about -0.04 of its potential returns per unit of risk. VanEck AEX UCITS is currently generating about -0.05 per unit of risk. If you would invest 4,037 in Vanguard FTSE Developed on September 5, 2024 and sell it today you would lose (48.00) from holding Vanguard FTSE Developed or give up 1.19% 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. VanEck AEX UCITS
Performance |
| Timeline |
| Vanguard FTSE Developed |
| VanEck AEX UCITS |
Vanguard FTSE and VanEck AEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and VanEck AEX
The main advantage of trading using opposite Vanguard FTSE and VanEck AEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, VanEck AEX 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 VanEck AEX will offset losses from the drop in VanEck AEX's long position.| Vanguard FTSE vs. Vanguard FTSE Emerging | Vanguard FTSE vs. iShares Core FTSE | Vanguard FTSE vs. HSBC MSCI Japan | Vanguard FTSE vs. Vanguard EUR Eurozone |
| VanEck AEX vs. VanEck Global Real | VanEck AEX vs. VanEck Sustainable World | VanEck AEX vs. VanEck Morningstar Developed | VanEck AEX vs. Vanguard SP 500 |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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