Correlation Between Vanguard Canadian and FT Cboe
Can any of the company-specific risk be diversified away by investing in both Vanguard Canadian and FT Cboe 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 Canadian and FT Cboe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Canadian Government and FT Cboe Vest, you can compare the effects of market volatilities on Vanguard Canadian and FT Cboe 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 Canadian with a short position of FT Cboe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Canadian and FT Cboe.
Diversification Opportunities for Vanguard Canadian and FT Cboe
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and MAYB-F is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Canadian Government and FT Cboe Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Cboe Vest and Vanguard Canadian 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 Canadian Government are associated (or correlated) with FT Cboe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Cboe Vest has no effect on the direction of Vanguard Canadian i.e., Vanguard Canadian and FT Cboe go up and down completely randomly.
Pair Corralation between Vanguard Canadian and FT Cboe
Assuming the 90 days trading horizon Vanguard Canadian is expected to generate 2.03 times less return on investment than FT Cboe. But when comparing it to its historical volatility, Vanguard Canadian Government is 1.01 times less risky than FT Cboe. It trades about 0.09 of its potential returns per unit of risk. FT Cboe Vest is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 4,437 in FT Cboe Vest on August 31, 2024 and sell it today you would earn a total of 85.00 from holding FT Cboe Vest or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vanguard Canadian Government vs. FT Cboe Vest
Performance |
| Timeline |
| Vanguard Canadian |
| FT Cboe Vest |
Vanguard Canadian and FT Cboe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Canadian and FT Cboe
The main advantage of trading using opposite Vanguard Canadian and FT Cboe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Canadian position performs unexpectedly, FT Cboe 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 FT Cboe will offset losses from the drop in FT Cboe's long position.| Vanguard Canadian vs. Vanguard Canadian Corporate | Vanguard Canadian vs. Vanguard Canadian Long Term | Vanguard Canadian vs. Vanguard Canadian Short | Vanguard Canadian vs. Vanguard Canadian Short Term |
| FT Cboe vs. NBI High Yield | FT Cboe vs. NBI Unconstrained Fixed | FT Cboe vs. Mackenzie Developed ex North | FT Cboe vs. BMO Short Term Bond |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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