Correlation Between Vanguard FTSE and ETC On
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and ETC On 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 ETC On 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 ETC on CMCI, you can compare the effects of market volatilities on Vanguard FTSE and ETC On 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 ETC On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and ETC On.
Diversification Opportunities for Vanguard FTSE and ETC On
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and ETC is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and ETC on CMCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETC on CMCI 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 ETC On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETC on CMCI has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and ETC On go up and down completely randomly.
Pair Corralation between Vanguard FTSE and ETC On
Assuming the 90 days trading horizon Vanguard FTSE Developed is expected to under-perform the ETC On. In addition to that, Vanguard FTSE is 2.05 times more volatile than ETC on CMCI. It trades about -0.06 of its total potential returns per unit of risk. ETC on CMCI is currently generating about 0.22 per unit of volatility. If you would invest 7,513 in ETC on CMCI on September 1, 2024 and sell it today you would earn a total of 175.00 from holding ETC on CMCI or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard FTSE Developed vs. ETC on CMCI
Performance |
| Timeline |
| Vanguard FTSE Developed |
| ETC on CMCI |
Vanguard FTSE and ETC On Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and ETC On
The main advantage of trading using opposite Vanguard FTSE and ETC On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, ETC On 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 ETC On will offset losses from the drop in ETC On's 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 |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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