Correlation Between Vanguard International and Vanguard ESG
Can any of the company-specific risk be diversified away by investing in both Vanguard International and Vanguard ESG 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 International and Vanguard ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard International Dividend and Vanguard ESG Corporate, you can compare the effects of market volatilities on Vanguard International and Vanguard ESG 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 International with a short position of Vanguard ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard International and Vanguard ESG.
Diversification Opportunities for Vanguard International and Vanguard ESG
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Vanguard is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard International Dividen and Vanguard ESG Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard ESG Corporate and Vanguard International 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 International Dividend are associated (or correlated) with Vanguard ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard ESG Corporate has no effect on the direction of Vanguard International i.e., Vanguard International and Vanguard ESG go up and down completely randomly.
Pair Corralation between Vanguard International and Vanguard ESG
Given the investment horizon of 90 days Vanguard International Dividend is expected to generate 1.75 times more return on investment than Vanguard ESG. However, Vanguard International is 1.75 times more volatile than Vanguard ESG Corporate. It trades about 0.06 of its potential returns per unit of risk. Vanguard ESG Corporate is currently generating about 0.04 per unit of risk. If you would invest 6,794 in Vanguard International Dividend on August 28, 2024 and sell it today you would earn a total of 1,460 from holding Vanguard International Dividend or generate 21.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard International Dividen vs. Vanguard ESG Corporate
Performance |
| Timeline |
| Vanguard International |
| Vanguard ESG Corporate |
Vanguard International and Vanguard ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard International and Vanguard ESG
The main advantage of trading using opposite Vanguard International and Vanguard ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard International position performs unexpectedly, Vanguard ESG 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 ESG will offset losses from the drop in Vanguard ESG's long position.| Vanguard International vs. iShares MSCI Intl | Vanguard International vs. iShares Edge MSCI | Vanguard International vs. iShares MSCI Emerging | Vanguard International vs. iShares MSCI Intl |
| Vanguard ESG vs. Vanguard ESG International | Vanguard ESG vs. Vanguard ESG Stock | Vanguard ESG vs. Vanguard Total Corporate | Vanguard ESG vs. Vanguard Ultra Short 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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