Correlation Between Vanguard and Xtrackers USD
Can any of the company-specific risk be diversified away by investing in both Vanguard and Xtrackers USD 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 Xtrackers USD 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 Xtrackers USD Corporate, you can compare the effects of market volatilities on Vanguard and Xtrackers USD 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 Xtrackers USD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and Xtrackers USD.
Diversification Opportunities for Vanguard and Xtrackers USD
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Xtrackers is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 and Xtrackers USD Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers USD Corporate 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 Xtrackers USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers USD Corporate has no effect on the direction of Vanguard i.e., Vanguard and Xtrackers USD go up and down completely randomly.
Pair Corralation between Vanguard and Xtrackers USD
Assuming the 90 days trading horizon Vanguard SP 500 is expected to generate 4.32 times more return on investment than Xtrackers USD. However, Vanguard is 4.32 times more volatile than Xtrackers USD Corporate. It trades about 0.09 of its potential returns per unit of risk. Xtrackers USD Corporate is currently generating about 0.15 per unit of risk. If you would invest 8,828 in Vanguard SP 500 on September 3, 2024 and sell it today you would earn a total of 1,280 from holding Vanguard SP 500 or generate 14.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard SP 500 vs. Xtrackers USD Corporate
Performance |
| Timeline |
| Vanguard SP 500 |
| Xtrackers USD Corporate |
Vanguard and Xtrackers USD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and Xtrackers USD
The main advantage of trading using opposite Vanguard and Xtrackers USD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, Xtrackers USD 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 USD will offset losses from the drop in Xtrackers USD's long position.| Vanguard vs. Vanguard FTSE Emerging | Vanguard vs. Vanguard USD Emerging | Vanguard vs. Vanguard FTSE Developed | Vanguard vs. Vanguard FTSE Japan |
| Xtrackers USD vs. UBSFund Solutions MSCI | Xtrackers USD vs. Vanguard SP 500 | Xtrackers USD vs. iShares VII PLC | Xtrackers USD vs. iShares Core SP |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |