Correlation Between Vanguard Value and PowerShares Global
Can any of the company-specific risk be diversified away by investing in both Vanguard Value and PowerShares 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 Value and PowerShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Value Index and PowerShares Global Funds, you can compare the effects of market volatilities on Vanguard Value and PowerShares 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 Value with a short position of PowerShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Value and PowerShares Global.
Diversification Opportunities for Vanguard Value and PowerShares Global
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and PowerShares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index and PowerShares Global Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PowerShares Global Funds and Vanguard Value 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 Value Index are associated (or correlated) with PowerShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PowerShares Global Funds has no effect on the direction of Vanguard Value i.e., Vanguard Value and PowerShares Global go up and down completely randomly.
Pair Corralation between Vanguard Value and PowerShares Global
Considering the 90-day investment horizon Vanguard Value Index is expected to generate 0.52 times more return on investment than PowerShares Global. However, Vanguard Value Index is 1.94 times less risky than PowerShares Global. It trades about 0.15 of its potential returns per unit of risk. PowerShares Global Funds is currently generating about 0.08 per unit of risk. If you would invest 15,854 in Vanguard Value Index on September 5, 2024 and sell it today you would earn a total of 2,118 from holding Vanguard Value Index or generate 13.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.2% |
| Values | Daily Returns |
Vanguard Value Index vs. PowerShares Global Funds
Performance |
| Timeline |
| Vanguard Value Index |
| PowerShares Global Funds |
Vanguard Value and PowerShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Value and PowerShares Global
The main advantage of trading using opposite Vanguard Value and PowerShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Value position performs unexpectedly, PowerShares 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 PowerShares Global will offset losses from the drop in PowerShares Global's long position.| Vanguard Value vs. Vanguard Growth Index | Vanguard Value vs. Vanguard Small Cap Value | Vanguard Value vs. Vanguard Mid Cap Value | Vanguard Value vs. Vanguard Small Cap Index |
| PowerShares Global vs. Vanguard Total Stock | PowerShares Global vs. SPDR SP 500 | PowerShares Global vs. Vanguard Total Bond | PowerShares Global vs. Vanguard Value Index |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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