Correlation Between Vanguard Extended and Vanguard Global
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and Vanguard Global 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 Extended and Vanguard Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Market and Vanguard Global Ex Us, you can compare the effects of market volatilities on Vanguard Extended and Vanguard Global 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 Extended with a short position of Vanguard Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Vanguard Global.
Diversification Opportunities for Vanguard Extended and Vanguard Global
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Vanguard is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Vanguard Global Ex Us in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Global Ex and Vanguard Extended 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 Extended Market are associated (or correlated) with Vanguard Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Global Ex has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Vanguard Global go up and down completely randomly.
Pair Corralation between Vanguard Extended and Vanguard Global
Assuming the 90 days horizon Vanguard Extended Market is expected to generate 1.22 times more return on investment than Vanguard Global. However, Vanguard Extended is 1.22 times more volatile than Vanguard Global Ex Us. It trades about 0.09 of its potential returns per unit of risk. Vanguard Global Ex Us is currently generating about 0.03 per unit of risk. If you would invest 17,432 in Vanguard Extended Market on August 31, 2024 and sell it today you would earn a total of 7,489 from holding Vanguard Extended Market or generate 42.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Extended Market vs. Vanguard Global Ex Us
Performance |
| Timeline |
| Vanguard Extended Market |
| Vanguard Global Ex |
Vanguard Extended and Vanguard Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and Vanguard Global
The main advantage of trading using opposite Vanguard Extended and Vanguard Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, Vanguard Global 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 Global will offset losses from the drop in Vanguard Global's long position.| Vanguard Extended vs. Fidelity Small Cap | Vanguard Extended vs. Ab Discovery Value | Vanguard Extended vs. Victory Rs Partners | Vanguard Extended vs. American Century Etf |
| Vanguard Global vs. Nasdaq 100 Index Fund | Vanguard Global vs. Eic Value Fund | Vanguard Global vs. Ab Value Fund | Vanguard Global vs. Shelton Funds |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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