Correlation Between Vanguard Funds and LG DAX
Can any of the company-specific risk be diversified away by investing in both Vanguard Funds and LG DAX 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 Funds and LG DAX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Funds Public and LG DAX Daily, you can compare the effects of market volatilities on Vanguard Funds and LG DAX 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 Funds with a short position of LG DAX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Funds and LG DAX.
Diversification Opportunities for Vanguard Funds and LG DAX
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and DES2 is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Funds Public and LG DAX Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG DAX Daily and Vanguard Funds 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 Funds Public are associated (or correlated) with LG DAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG DAX Daily has no effect on the direction of Vanguard Funds i.e., Vanguard Funds and LG DAX go up and down completely randomly.
Pair Corralation between Vanguard Funds and LG DAX
Assuming the 90 days trading horizon Vanguard Funds Public is expected to generate 0.81 times more return on investment than LG DAX. However, Vanguard Funds Public is 1.24 times less risky than LG DAX. It trades about 0.21 of its potential returns per unit of risk. LG DAX Daily is currently generating about 0.1 per unit of risk. If you would invest 10,231 in Vanguard Funds Public on August 27, 2024 and sell it today you would earn a total of 586.00 from holding Vanguard Funds Public or generate 5.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Funds Public vs. LG DAX Daily
Performance |
| Timeline |
| Vanguard Funds Public |
| LG DAX Daily |
Vanguard Funds and LG DAX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Funds and LG DAX
The main advantage of trading using opposite Vanguard Funds and LG DAX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Funds position performs unexpectedly, LG DAX 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 LG DAX will offset losses from the drop in LG DAX's long position.| Vanguard Funds vs. Vanguard ESG Developed | Vanguard Funds vs. Vanguard Funds Public | Vanguard Funds vs. Vanguard Funds PLC | Vanguard Funds vs. Vanguard Funds Public |
| LG DAX vs. LG DAX Daily | LG DAX vs. iShares Govt Bond | LG DAX vs. Amundi MSCI Europe | LG DAX vs. iShares Global AAA AA |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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