Correlation Between Vanguard FTSE and Exchange Listed
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and Exchange Listed 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 Exchange Listed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard FTSE All World and Exchange Listed Funds, you can compare the effects of market volatilities on Vanguard FTSE and Exchange Listed 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 Exchange Listed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Exchange Listed.
Diversification Opportunities for Vanguard FTSE and Exchange Listed
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Exchange is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE All World and Exchange Listed Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Listed Funds 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 All World are associated (or correlated) with Exchange Listed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Listed Funds has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Exchange Listed go up and down completely randomly.
Pair Corralation between Vanguard FTSE and Exchange Listed
Considering the 90-day investment horizon Vanguard FTSE is expected to generate 2.72 times less return on investment than Exchange Listed. In addition to that, Vanguard FTSE is 1.01 times more volatile than Exchange Listed Funds. It trades about 0.02 of its total potential returns per unit of risk. Exchange Listed Funds is currently generating about 0.05 per unit of volatility. If you would invest 2,531 in Exchange Listed Funds on September 1, 2024 and sell it today you would earn a total of 123.00 from holding Exchange Listed Funds or generate 4.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Vanguard FTSE All World vs. Exchange Listed Funds
Performance |
| Timeline |
| Vanguard FTSE All |
| Exchange Listed Funds |
Vanguard FTSE and Exchange Listed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and Exchange Listed
The main advantage of trading using opposite Vanguard FTSE and Exchange Listed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, Exchange Listed 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 Exchange Listed will offset losses from the drop in Exchange Listed's long position.| Vanguard FTSE vs. Vanguard FTSE Emerging | Vanguard FTSE vs. Vanguard Small Cap Index | Vanguard FTSE vs. Vanguard Total Bond | Vanguard FTSE vs. Vanguard FTSE All World |
| Exchange Listed vs. iShares ESG Aggregate | Exchange Listed vs. SPDR MSCI Emerging | Exchange Listed vs. Aquagold International | Exchange Listed vs. Thrivent High Yield |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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