Correlation Between Vanguard Global and Vanguard Canadian
Can any of the company-specific risk be diversified away by investing in both Vanguard Global and Vanguard Canadian 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 Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Global Momentum and Vanguard Canadian Corporate, you can compare the effects of market volatilities on Vanguard Global and Vanguard Canadian 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 Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Global and Vanguard Canadian.
Diversification Opportunities for Vanguard Global and Vanguard Canadian
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and Vanguard is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Global Momentum and Vanguard Canadian Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Canadian 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 Momentum are associated (or correlated) with Vanguard Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Canadian has no effect on the direction of Vanguard Global i.e., Vanguard Global and Vanguard Canadian go up and down completely randomly.
Pair Corralation between Vanguard Global and Vanguard Canadian
Assuming the 90 days trading horizon Vanguard Global Momentum is expected to generate 4.18 times more return on investment than Vanguard Canadian. However, Vanguard Global is 4.18 times more volatile than Vanguard Canadian Corporate. It trades about 0.12 of its potential returns per unit of risk. Vanguard Canadian Corporate is currently generating about 0.17 per unit of risk. If you would invest 5,680 in Vanguard Global Momentum on August 29, 2024 and sell it today you would earn a total of 996.00 from holding Vanguard Global Momentum or generate 17.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Global Momentum vs. Vanguard Canadian Corporate
Performance |
| Timeline |
| Vanguard Global Momentum |
| Vanguard Canadian |
Vanguard Global and Vanguard Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Global and Vanguard Canadian
The main advantage of trading using opposite Vanguard Global and Vanguard Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Global position performs unexpectedly, Vanguard Canadian 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 Canadian will offset losses from the drop in Vanguard Canadian's long position.| Vanguard Global vs. Vanguard Global Value | Vanguard Global vs. Vanguard Global Minimum | Vanguard Global vs. Vanguard FTSE Developed | Vanguard Global vs. Vanguard Dividend Appreciation |
| Vanguard Canadian vs. BMO Long Corporate | Vanguard Canadian vs. BMO Short Corporate | Vanguard Canadian vs. BMO High Yield | Vanguard Canadian vs. BMO Short Provincial |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |