Correlation Between Vanguard Total and Xtrackers FTSE
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Xtrackers 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 Total and Xtrackers FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Stock and Xtrackers FTSE Developed, you can compare the effects of market volatilities on Vanguard Total and Xtrackers 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 Total with a short position of Xtrackers FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Xtrackers FTSE.
Diversification Opportunities for Vanguard Total and Xtrackers FTSE
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Xtrackers is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Xtrackers FTSE Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers FTSE Developed and Vanguard Total 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 Total Stock are associated (or correlated) with Xtrackers FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers FTSE Developed has no effect on the direction of Vanguard Total i.e., Vanguard Total and Xtrackers FTSE go up and down completely randomly.
Pair Corralation between Vanguard Total and Xtrackers FTSE
Considering the 90-day investment horizon Vanguard Total Stock is expected to generate 0.97 times more return on investment than Xtrackers FTSE. However, Vanguard Total Stock is 1.04 times less risky than Xtrackers FTSE. It trades about 0.2 of its potential returns per unit of risk. Xtrackers FTSE Developed is currently generating about -0.06 per unit of risk. If you would invest 27,445 in Vanguard Total Stock on September 12, 2024 and sell it today you would earn a total of 2,494 from holding Vanguard Total Stock or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Stock vs. Xtrackers FTSE Developed
Performance |
| Timeline |
| Vanguard Total Stock |
| Xtrackers FTSE Developed |
Vanguard Total and Xtrackers FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Xtrackers FTSE
The main advantage of trading using opposite Vanguard Total and Xtrackers FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Xtrackers 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 Xtrackers FTSE will offset losses from the drop in Xtrackers FTSE's long position.| Vanguard Total vs. Vanguard SP 500 | Vanguard Total vs. Vanguard Real Estate | Vanguard Total vs. Vanguard Total Bond | Vanguard Total vs. Vanguard High Dividend |
| Xtrackers FTSE vs. Xtrackers Russell Multifactor | Xtrackers FTSE vs. Xtrackers MSCI All | Xtrackers FTSE vs. WisdomTree Dynamic Currency | Xtrackers FTSE vs. Xtrackers MSCI Eurozone |
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 CEOs Directory module to screen CEOs from public companies around the world.
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