Correlation Between Vanguard and ZKB Gold
Can any of the company-specific risk be diversified away by investing in both Vanguard and ZKB Gold 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 ZKB Gold 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 ZKB Gold ETF, you can compare the effects of market volatilities on Vanguard and ZKB Gold 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 ZKB Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and ZKB Gold.
Diversification Opportunities for Vanguard and ZKB Gold
Very weak diversification
The 3 months correlation between Vanguard and ZKB is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 and ZKB Gold ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZKB Gold ETF 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 ZKB Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZKB Gold ETF has no effect on the direction of Vanguard i.e., Vanguard and ZKB Gold go up and down completely randomly.
Pair Corralation between Vanguard and ZKB Gold
Assuming the 90 days trading horizon Vanguard SP 500 is expected to generate 1.03 times more return on investment than ZKB Gold. However, Vanguard is 1.03 times more volatile than ZKB Gold ETF. It trades about 0.19 of its potential returns per unit of risk. ZKB Gold ETF is currently generating about 0.12 per unit of risk. If you would invest 9,007 in Vanguard SP 500 on September 3, 2024 and sell it today you would earn a total of 1,101 from holding Vanguard SP 500 or generate 12.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard SP 500 vs. ZKB Gold ETF
Performance |
| Timeline |
| Vanguard SP 500 |
| ZKB Gold ETF |
Vanguard and ZKB Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and ZKB Gold
The main advantage of trading using opposite Vanguard and ZKB Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, ZKB Gold 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 ZKB Gold will offset losses from the drop in ZKB Gold's long position.| Vanguard vs. Vanguard FTSE Emerging | Vanguard vs. Vanguard USD Emerging | Vanguard vs. Vanguard FTSE Developed | Vanguard vs. Vanguard FTSE Japan |
| ZKB Gold vs. UBSFund Solutions MSCI | ZKB Gold vs. Vanguard SP 500 | ZKB Gold vs. iShares VII PLC | ZKB Gold 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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