Correlation Between Vanguard and Amundi Physical
Can any of the company-specific risk be diversified away by investing in both Vanguard and Amundi Physical 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 and Amundi Physical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard SP 500 and Amundi Physical Gold, you can compare the effects of market volatilities on Vanguard and Amundi Physical 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 with a short position of Amundi Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and Amundi Physical.
Diversification Opportunities for Vanguard and Amundi Physical
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vanguard and Amundi is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 and Amundi Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Physical Gold and Vanguard 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 SP 500 are associated (or correlated) with Amundi Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Physical Gold has no effect on the direction of Vanguard i.e., Vanguard and Amundi Physical go up and down completely randomly.
Pair Corralation between Vanguard and Amundi Physical
Assuming the 90 days trading horizon Vanguard is expected to generate 1.37 times less return on investment than Amundi Physical. But when comparing it to its historical volatility, Vanguard SP 500 is 1.51 times less risky than Amundi Physical. It trades about 0.2 of its potential returns per unit of risk. Amundi Physical Gold is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 10,382 in Amundi Physical Gold on September 12, 2024 and sell it today you would earn a total of 398.00 from holding Amundi Physical Gold or generate 3.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard SP 500 vs. Amundi Physical Gold
Performance |
| Timeline |
| Vanguard SP 500 |
| Amundi Physical Gold |
Vanguard and Amundi Physical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and Amundi Physical
The main advantage of trading using opposite Vanguard and Amundi Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, Amundi Physical 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 Amundi Physical will offset losses from the drop in Amundi Physical's long position.| Vanguard vs. SPDR Dow Jones | Vanguard vs. iShares Core MSCI | Vanguard vs. iShares SP 500 | Vanguard vs. Vanguard FTSE All World |
| Amundi Physical vs. Amundi Index Solutions | Amundi Physical vs. Amundi MSCI World | Amundi Physical vs. Amundi Index Solutions | Amundi Physical vs. LG Russell 2000 |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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