Correlation Between Vanguard FTSE and Guardian
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and Guardian 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 Guardian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard FTSE Global and Guardian i3 Global, you can compare the effects of market volatilities on Vanguard FTSE and Guardian 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 Guardian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Guardian.
Diversification Opportunities for Vanguard FTSE and Guardian
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Guardian is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Global and Guardian i3 Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian i3 Global 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 Global are associated (or correlated) with Guardian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian i3 Global has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Guardian go up and down completely randomly.
Pair Corralation between Vanguard FTSE and Guardian
Assuming the 90 days trading horizon Vanguard FTSE Global is expected to generate 0.49 times more return on investment than Guardian. However, Vanguard FTSE Global is 2.03 times less risky than Guardian. It trades about -0.03 of its potential returns per unit of risk. Guardian i3 Global is currently generating about -0.16 per unit of risk. If you would invest 6,625 in Vanguard FTSE Global on November 27, 2024 and sell it today you would lose (27.00) from holding Vanguard FTSE Global or give up 0.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard FTSE Global vs. Guardian i3 Global
Performance |
| Timeline |
| Vanguard FTSE Global |
| Guardian i3 Global |
Vanguard FTSE and Guardian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and Guardian
The main advantage of trading using opposite Vanguard FTSE and Guardian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, Guardian 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 Guardian will offset losses from the drop in Guardian's long position.| Vanguard FTSE vs. Vanguard FTSE Canada | Vanguard FTSE vs. Vanguard Canadian Aggregate | Vanguard FTSE vs. Vanguard Total Market | Vanguard FTSE vs. iShares Core MSCI |
| Guardian vs. Guardian i3 Quality | Guardian vs. Guardian Directed Premium | Guardian vs. Guardian Directed Equity | Guardian vs. CI ONE Global |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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