Correlation Between Vanguard FTSE and AIM ETF
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and AIM ETF 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 AIM ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard FTSE Emerging and AIM ETF Products, you can compare the effects of market volatilities on Vanguard FTSE and AIM ETF 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 AIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and AIM ETF.
Diversification Opportunities for Vanguard FTSE and AIM ETF
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and AIM is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Emerging and AIM ETF Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM ETF Products 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 Emerging are associated (or correlated) with AIM ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM ETF Products has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and AIM ETF go up and down completely randomly.
Pair Corralation between Vanguard FTSE and AIM ETF
Considering the 90-day investment horizon Vanguard FTSE Emerging is expected to under-perform the AIM ETF. In addition to that, Vanguard FTSE is 2.25 times more volatile than AIM ETF Products. It trades about -0.08 of its total potential returns per unit of risk. AIM ETF Products is currently generating about 0.31 per unit of volatility. If you would invest 3,355 in AIM ETF Products on October 25, 2024 and sell it today you would earn a total of 64.59 from holding AIM ETF Products or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard FTSE Emerging vs. AIM ETF Products
Performance |
| Timeline |
| Vanguard FTSE Emerging |
| AIM ETF Products |
Vanguard FTSE and AIM ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and AIM ETF
The main advantage of trading using opposite Vanguard FTSE and AIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, AIM ETF 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 AIM ETF will offset losses from the drop in AIM ETF's long position.| Vanguard FTSE vs. Vanguard FTSE Developed | Vanguard FTSE vs. Vanguard Real Estate | Vanguard FTSE vs. Vanguard Small Cap Index | Vanguard FTSE vs. Vanguard Total Stock |
| AIM ETF vs. FT Vest Equity | AIM ETF vs. Northern Lights | AIM ETF vs. Dimensional International High | AIM ETF vs. First Trust Exchange Traded |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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