Correlation Between Vanguard FTSE and TD Active
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and TD Active 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 TD Active 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 TD Active Global, you can compare the effects of market volatilities on Vanguard FTSE and TD Active 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 TD Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and TD Active.
Diversification Opportunities for Vanguard FTSE and TD Active
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and TGGR is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Global and TD Active Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Active 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 TD Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Active Global has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and TD Active go up and down completely randomly.
Pair Corralation between Vanguard FTSE and TD Active
Assuming the 90 days trading horizon Vanguard FTSE Global is expected to generate 0.82 times more return on investment than TD Active. However, Vanguard FTSE Global is 1.22 times less risky than TD Active. It trades about 0.16 of its potential returns per unit of risk. TD Active Global is currently generating about 0.11 per unit of risk. If you would invest 5,138 in Vanguard FTSE Global on August 25, 2024 and sell it today you would earn a total of 1,275 from holding Vanguard FTSE Global or generate 24.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard FTSE Global vs. TD Active Global
Performance |
| Timeline |
| Vanguard FTSE Global |
| TD Active Global |
Vanguard FTSE and TD Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and TD Active
The main advantage of trading using opposite Vanguard FTSE and TD Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, TD Active 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 TD Active will offset losses from the drop in TD Active's long position.| Vanguard FTSE vs. Vanguard FTSE Canada | Vanguard FTSE vs. Vanguard Canadian Aggregate | Vanguard FTSE vs. Vanguard Total Market | Vanguard FTSE vs. Vanguard FTSE Emerging |
| TD Active vs. Vanguard FTSE Canada | TD Active vs. Vanguard Canadian Aggregate | TD Active vs. Vanguard Total Market | TD Active vs. Vanguard FTSE Emerging |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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