Correlation Between Vanguard Dividend and Global X
Can any of the company-specific risk be diversified away by investing in both Vanguard Dividend and Global X 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 Dividend and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Dividend Appreciation and Global X Europe, you can compare the effects of market volatilities on Vanguard Dividend and Global X 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 Dividend with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Dividend and Global X.
Diversification Opportunities for Vanguard Dividend and Global X
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Global is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Dividend Appreciation and Global X Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Europe and Vanguard Dividend 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 Dividend Appreciation are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Europe has no effect on the direction of Vanguard Dividend i.e., Vanguard Dividend and Global X go up and down completely randomly.
Pair Corralation between Vanguard Dividend and Global X
Assuming the 90 days trading horizon Vanguard Dividend Appreciation is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Dividend Appreciation is 1.33 times less risky than Global X. The etf trades about -0.06 of its potential returns per unit of risk. The Global X Europe is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 5,484 in Global X Europe on November 27, 2024 and sell it today you would earn a total of 200.00 from holding Global X Europe or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Dividend Appreciation vs. Global X Europe
Performance |
| Timeline |
| Vanguard Dividend |
| Global X Europe |
Vanguard Dividend and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Dividend and Global X
The main advantage of trading using opposite Vanguard Dividend and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Dividend position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Vanguard Dividend vs. Vanguard Dividend Appreciation | Vanguard Dividend vs. Vanguard Total Market | Vanguard Dividend vs. Vanguard FTSE Emerging | Vanguard Dividend vs. Vanguard FTSE Global |
| Global X vs. Global X Intl | Global X vs. Global X Canadian | Global X vs. Global X SPTSX | Global X vs. Global X Canadian |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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