Correlation Between Vanguard FTSE and VinaCapital Vietnam
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and VinaCapital Vietnam 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 VinaCapital Vietnam 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 VinaCapital Vietnam Opportunity, you can compare the effects of market volatilities on Vanguard FTSE and VinaCapital Vietnam 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 VinaCapital Vietnam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and VinaCapital Vietnam.
Diversification Opportunities for Vanguard FTSE and VinaCapital Vietnam
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and VinaCapital is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and VinaCapital Vietnam Opportunit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VinaCapital Vietnam 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 VinaCapital Vietnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VinaCapital Vietnam has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and VinaCapital Vietnam go up and down completely randomly.
Pair Corralation between Vanguard FTSE and VinaCapital Vietnam
Assuming the 90 days trading horizon Vanguard FTSE Developed is expected to under-perform the VinaCapital Vietnam. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard FTSE Developed is 1.08 times less risky than VinaCapital Vietnam. The etf trades about -0.13 of its potential returns per unit of risk. The VinaCapital Vietnam Opportunity is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 43,700 in VinaCapital Vietnam Opportunity on September 25, 2024 and sell it today you would earn a total of 1,450 from holding VinaCapital Vietnam Opportunity or generate 3.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard FTSE Developed vs. VinaCapital Vietnam Opportunit
Performance |
| Timeline |
| Vanguard FTSE Developed |
| VinaCapital Vietnam |
Vanguard FTSE and VinaCapital Vietnam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and VinaCapital Vietnam
The main advantage of trading using opposite Vanguard FTSE and VinaCapital Vietnam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, VinaCapital Vietnam 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 VinaCapital Vietnam will offset losses from the drop in VinaCapital Vietnam's long position.| Vanguard FTSE vs. SP 500 VIX | Vanguard FTSE vs. Leverage Shares 3x | Vanguard FTSE vs. Leverage Shares 3x | Vanguard FTSE vs. WisdomTree Natural Gas |
| VinaCapital Vietnam vs. Vanguard FTSE Developed | VinaCapital Vietnam vs. Leverage Shares 2x | VinaCapital Vietnam vs. Amundi Index Solutions | VinaCapital Vietnam 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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