Correlation Between Vanguard FTSE and Multi Units
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and Multi Units 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 FTSE and Multi Units into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard FTSE Developed and Multi Units France, you can compare the effects of market volatilities on Vanguard FTSE and Multi Units 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 FTSE with a short position of Multi Units. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Multi Units.
Diversification Opportunities for Vanguard FTSE and Multi Units
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Multi is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and Multi Units France in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Units France and Vanguard FTSE 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 FTSE Developed are associated (or correlated) with Multi Units. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Units France has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Multi Units go up and down completely randomly.
Pair Corralation between Vanguard FTSE and Multi Units
Assuming the 90 days trading horizon Vanguard FTSE is expected to generate 1.8 times less return on investment than Multi Units. But when comparing it to its historical volatility, Vanguard FTSE Developed is 1.06 times less risky than Multi Units. It trades about 0.06 of its potential returns per unit of risk. Multi Units France is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 202,013 in Multi Units France on September 12, 2024 and sell it today you would earn a total of 63,162 from holding Multi Units France or generate 31.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.7% |
| Values | Daily Returns |
Vanguard FTSE Developed vs. Multi Units France
Performance |
| Timeline |
| Vanguard FTSE Developed |
| Multi Units France |
Vanguard FTSE and Multi Units Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and Multi Units
The main advantage of trading using opposite Vanguard FTSE and Multi Units positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, Multi Units 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 Multi Units will offset losses from the drop in Multi Units' long position.| Vanguard FTSE vs. Leverage Shares 2x | Vanguard FTSE vs. Amundi Index Solutions | Vanguard FTSE vs. Amundi Index Solutions | Vanguard FTSE vs. Albion Venture Capital |
| Multi Units vs. Vanguard FTSE Developed | Multi Units vs. Leverage Shares 2x | Multi Units vs. Amundi Index Solutions | Multi Units vs. Amundi Index Solutions |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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