Correlation Between Vanguard Real and Vanguard FTSE
Can any of the company-specific risk be diversified away by investing in both Vanguard Real and Vanguard FTSE 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 Real and Vanguard FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Real Estate and Vanguard FTSE Europe, you can compare the effects of market volatilities on Vanguard Real and Vanguard FTSE 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 Real with a short position of Vanguard FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Real and Vanguard FTSE.
Diversification Opportunities for Vanguard Real and Vanguard FTSE
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vanguard and Vanguard is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Real Estate and Vanguard FTSE Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Europe and Vanguard Real 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 Real Estate are associated (or correlated) with Vanguard FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Europe has no effect on the direction of Vanguard Real i.e., Vanguard Real and Vanguard FTSE go up and down completely randomly.
Pair Corralation between Vanguard Real and Vanguard FTSE
Considering the 90-day investment horizon Vanguard Real Estate is expected to generate 1.14 times more return on investment than Vanguard FTSE. However, Vanguard Real is 1.14 times more volatile than Vanguard FTSE Europe. It trades about 0.09 of its potential returns per unit of risk. Vanguard FTSE Europe is currently generating about 0.01 per unit of risk. If you would invest 8,308 in Vanguard Real Estate on August 27, 2024 and sell it today you would earn a total of 1,316 from holding Vanguard Real Estate or generate 15.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Real Estate vs. Vanguard FTSE Europe
Performance |
| Timeline |
| Vanguard Real Estate |
| Vanguard FTSE Europe |
Vanguard Real and Vanguard FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Real and Vanguard FTSE
The main advantage of trading using opposite Vanguard Real and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Real position performs unexpectedly, Vanguard FTSE 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 FTSE will offset losses from the drop in Vanguard FTSE's long position.| Vanguard Real vs. Vanguard FTSE Emerging | Vanguard Real vs. Vanguard High Dividend | Vanguard Real vs. Vanguard Total Stock | Vanguard Real vs. Vanguard Total Bond |
| Vanguard FTSE vs. WisdomTree Europe Hedged | Vanguard FTSE vs. WisdomTree International Hedged | Vanguard FTSE vs. WisdomTree Emerging Markets | Vanguard FTSE vs. WisdomTree Dynamic Currency |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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