Correlation Between Vanguard Utilities and Global X
Can any of the company-specific risk be diversified away by investing in both Vanguard Utilities and Global X 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 Utilities and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Utilities Index and Global X Renewable, you can compare the effects of market volatilities on Vanguard Utilities and Global X 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 Utilities with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Utilities and Global X.
Diversification Opportunities for Vanguard Utilities and Global X
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Global is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Utilities Index and Global X Renewable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Renewable and Vanguard Utilities 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 Utilities Index are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Renewable has no effect on the direction of Vanguard Utilities i.e., Vanguard Utilities and Global X go up and down completely randomly.
Pair Corralation between Vanguard Utilities and Global X
Considering the 90-day investment horizon Vanguard Utilities Index is expected to generate 0.71 times more return on investment than Global X. However, Vanguard Utilities Index is 1.4 times less risky than Global X. It trades about 0.05 of its potential returns per unit of risk. Global X Renewable is currently generating about -0.23 per unit of risk. If you would invest 17,425 in Vanguard Utilities Index on August 27, 2024 and sell it today you would earn a total of 180.00 from holding Vanguard Utilities Index or generate 1.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Utilities Index vs. Global X Renewable
Performance |
| Timeline |
| Vanguard Utilities Index |
| Global X Renewable |
Vanguard Utilities and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Utilities and Global X
The main advantage of trading using opposite Vanguard Utilities and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Utilities position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Vanguard Utilities vs. Vanguard Consumer Staples | Vanguard Utilities vs. Vanguard Materials Index | Vanguard Utilities vs. Vanguard Communication Services | Vanguard Utilities vs. Vanguard Financials Index |
| Global X vs. Global X CleanTech | Global X vs. Global X Clean | Global X vs. Global X Wind | Global X vs. Global X Thematic |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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