Correlation Between Vanguard Pacific and Vanguard International
Can any of the company-specific risk be diversified away by investing in both Vanguard Pacific and Vanguard 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 Pacific and Vanguard International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Pacific Stock and Vanguard International Dividend, you can compare the effects of market volatilities on Vanguard Pacific and Vanguard 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 Pacific with a short position of Vanguard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Pacific and Vanguard International.
Diversification Opportunities for Vanguard Pacific and Vanguard International
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Vanguard is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Pacific Stock and Vanguard International Dividen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard International and Vanguard Pacific 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 Pacific Stock are associated (or correlated) with Vanguard International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard International has no effect on the direction of Vanguard Pacific i.e., Vanguard Pacific and Vanguard International go up and down completely randomly.
Pair Corralation between Vanguard Pacific and Vanguard International
Assuming the 90 days horizon Vanguard Pacific is expected to generate 1.31 times less return on investment than Vanguard International. In addition to that, Vanguard Pacific is 1.33 times more volatile than Vanguard International Dividend. It trades about 0.04 of its total potential returns per unit of risk. Vanguard International Dividend is currently generating about 0.07 per unit of volatility. If you would invest 3,506 in Vanguard International Dividend on August 29, 2024 and sell it today you would earn a total of 529.00 from holding Vanguard International Dividend or generate 15.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Pacific Stock vs. Vanguard International Dividen
Performance |
| Timeline |
| Vanguard Pacific Stock |
| Vanguard International |
Vanguard Pacific and Vanguard International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Pacific and Vanguard International
The main advantage of trading using opposite Vanguard Pacific and Vanguard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Pacific position performs unexpectedly, Vanguard 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 Vanguard International will offset losses from the drop in Vanguard International's long position.| Vanguard Pacific vs. Vanguard Pacific Stock | Vanguard Pacific vs. Matthews Asia Dividend | Vanguard Pacific vs. Matthews Asia Dividend | Vanguard Pacific vs. Fidelity Pacific Basin |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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