Correlation Between Vanguard Total and Xtrackers International
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Xtrackers 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 Total and Xtrackers International 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 International Real, you can compare the effects of market volatilities on Vanguard Total and Xtrackers 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 Total with a short position of Xtrackers International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Xtrackers International.
Diversification Opportunities for Vanguard Total and Xtrackers International
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Xtrackers is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Xtrackers International Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers International has no effect on the direction of Vanguard Total i.e., Vanguard Total and Xtrackers International go up and down completely randomly.
Pair Corralation between Vanguard Total and Xtrackers International
Considering the 90-day investment horizon Vanguard Total Stock is expected to generate 0.82 times more return on investment than Xtrackers International. However, Vanguard Total Stock is 1.22 times less risky than Xtrackers International. It trades about 0.15 of its potential returns per unit of risk. Xtrackers International Real is currently generating about 0.03 per unit of risk. If you would invest 22,302 in Vanguard Total Stock on August 26, 2024 and sell it today you would earn a total of 7,349 from holding Vanguard Total Stock or generate 32.95% 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 International Real
Performance |
| Timeline |
| Vanguard Total Stock |
| Xtrackers International |
Vanguard Total and Xtrackers International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Xtrackers International
The main advantage of trading using opposite Vanguard Total and Xtrackers International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Xtrackers 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 Xtrackers International will offset losses from the drop in Xtrackers International's long position.| Vanguard Total vs. Vanguard SP 500 | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Real Estate | Vanguard Total vs. Vanguard Total Bond |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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