Correlation Between Vanguard Global and WisdomTree International
Can any of the company-specific risk be diversified away by investing in both Vanguard Global and WisdomTree 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 WisdomTree International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Global ex US and WisdomTree International High, you can compare the effects of market volatilities on Vanguard Global and WisdomTree 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 WisdomTree International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Global and WisdomTree International.
Diversification Opportunities for Vanguard Global and WisdomTree International
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and WisdomTree is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Global ex US and WisdomTree International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree 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 ex US are associated (or correlated) with WisdomTree International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree International has no effect on the direction of Vanguard Global i.e., Vanguard Global and WisdomTree International go up and down completely randomly.
Pair Corralation between Vanguard Global and WisdomTree International
Given the investment horizon of 90 days Vanguard Global ex US is expected to generate 1.03 times more return on investment than WisdomTree International. However, Vanguard Global is 1.03 times more volatile than WisdomTree International High. It trades about 0.03 of its potential returns per unit of risk. WisdomTree International High is currently generating about -0.01 per unit of risk. If you would invest 4,194 in Vanguard Global ex US on September 1, 2024 and sell it today you would earn a total of 147.00 from holding Vanguard Global ex US or generate 3.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Vanguard Global ex US vs. WisdomTree International High
Performance |
| Timeline |
| Vanguard Global ex |
| WisdomTree International |
Vanguard Global and WisdomTree International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Global and WisdomTree International
The main advantage of trading using opposite Vanguard Global and WisdomTree International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Global position performs unexpectedly, WisdomTree 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 WisdomTree International will offset losses from the drop in WisdomTree International's long position.| Vanguard Global vs. Vanguard FTSE All World | Vanguard Global vs. Vanguard Real Estate | Vanguard Global vs. Vanguard Total International | Vanguard Global vs. Schwab REIT ETF |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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