Correlation Between Vanguard World and FedEx
Can any of the company-specific risk be diversified away by investing in both Vanguard World and FedEx 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 World and FedEx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard World and FedEx, you can compare the effects of market volatilities on Vanguard World and FedEx 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 World with a short position of FedEx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard World and FedEx.
Diversification Opportunities for Vanguard World and FedEx
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vanguard and FedEx is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard World and FedEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx and Vanguard World 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 World are associated (or correlated) with FedEx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FedEx has no effect on the direction of Vanguard World i.e., Vanguard World and FedEx go up and down completely randomly.
Pair Corralation between Vanguard World and FedEx
Assuming the 90 days trading horizon Vanguard World is expected to under-perform the FedEx. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard World is 1.48 times less risky than FedEx. The etf trades about -0.37 of its potential returns per unit of risk. The FedEx is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 587,112 in FedEx on September 19, 2024 and sell it today you would lose (22,412) from holding FedEx or give up 3.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Vanguard World vs. FedEx
Performance |
| Timeline |
| Vanguard World |
| FedEx |
Vanguard World and FedEx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard World and FedEx
The main advantage of trading using opposite Vanguard World and FedEx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard World position performs unexpectedly, FedEx 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 FedEx will offset losses from the drop in FedEx's long position.| Vanguard World vs. Vanguard Index Funds | Vanguard World vs. Vanguard Index Funds | Vanguard World vs. SPDR SP 500 | Vanguard World vs. Vanguard Bond Index |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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