Correlation Between Vanguard Global and Vanguard International
Can any of the company-specific risk be diversified away by investing in both Vanguard Global and Vanguard International 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 Global and Vanguard International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Global Wellington and Vanguard International Core, you can compare the effects of market volatilities on Vanguard Global and Vanguard International 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 Global with a short position of Vanguard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Global and Vanguard International.
Diversification Opportunities for Vanguard Global and Vanguard International
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Vanguard is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Global Wellington and Vanguard International Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard International and Vanguard Global 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 Global Wellington are associated (or correlated) with Vanguard International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard International has no effect on the direction of Vanguard Global i.e., Vanguard Global and Vanguard International go up and down completely randomly.
Pair Corralation between Vanguard Global and Vanguard International
Assuming the 90 days horizon Vanguard Global Wellington is expected to generate 0.49 times more return on investment than Vanguard International. However, Vanguard Global Wellington is 2.02 times less risky than Vanguard International. It trades about 0.07 of its potential returns per unit of risk. Vanguard International Core is currently generating about 0.02 per unit of risk. If you would invest 2,602 in Vanguard Global Wellington on September 1, 2024 and sell it today you would earn a total of 105.00 from holding Vanguard Global Wellington or generate 4.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Global Wellington vs. Vanguard International Core
Performance |
| Timeline |
| Vanguard Global Well |
| Vanguard International |
Vanguard Global and Vanguard International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Global and Vanguard International
The main advantage of trading using opposite Vanguard Global and Vanguard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Global position performs unexpectedly, Vanguard International 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 Vanguard International will offset losses from the drop in Vanguard International's long position.| Vanguard Global vs. Vanguard Global Wellesley | Vanguard Global vs. Vanguard Global Wellington | Vanguard Global vs. Vanguard International Core | Vanguard Global vs. Vanguard Global Minimum |
| Vanguard International vs. Vanguard Total Bond | Vanguard International vs. Vanguard Total Stock | Vanguard International vs. Vanguard Total International | Vanguard International vs. Vanguard Small Cap Index |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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