Correlation Between Vanguard Total and Mackenzie International
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Mackenzie 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 Mackenzie International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Market and Mackenzie International Equity, you can compare the effects of market volatilities on Vanguard Total and Mackenzie 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 Mackenzie International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Mackenzie International.
Diversification Opportunities for Vanguard Total and Mackenzie International
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Mackenzie is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Market and Mackenzie International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie 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 Market are associated (or correlated) with Mackenzie International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie International has no effect on the direction of Vanguard Total i.e., Vanguard Total and Mackenzie International go up and down completely randomly.
Pair Corralation between Vanguard Total and Mackenzie International
Assuming the 90 days trading horizon Vanguard Total Market is expected to generate 1.01 times more return on investment than Mackenzie International. However, Vanguard Total is 1.01 times more volatile than Mackenzie International Equity. It trades about 0.16 of its potential returns per unit of risk. Mackenzie International Equity is currently generating about 0.07 per unit of risk. If you would invest 7,630 in Vanguard Total Market on August 31, 2024 and sell it today you would earn a total of 3,809 from holding Vanguard Total Market or generate 49.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Market vs. Mackenzie International Equity
Performance |
| Timeline |
| Vanguard Total Market |
| Mackenzie International |
Vanguard Total and Mackenzie International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Mackenzie International
The main advantage of trading using opposite Vanguard Total and Mackenzie International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Mackenzie 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 Mackenzie International will offset losses from the drop in Mackenzie International's long position.| Vanguard Total vs. Vanguard FTSE Canada | Vanguard Total vs. Vanguard FTSE Emerging | Vanguard Total vs. iShares Core MSCI | Vanguard Total vs. Vanguard Canadian Aggregate |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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