Correlation Between Vanguard Extended and Xtrackers Russell
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and Xtrackers Russell 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 Extended and Xtrackers Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Market and Xtrackers Russell Multifactor, you can compare the effects of market volatilities on Vanguard Extended and Xtrackers Russell 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 Extended with a short position of Xtrackers Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Xtrackers Russell.
Diversification Opportunities for Vanguard Extended and Xtrackers Russell
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Xtrackers is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Xtrackers Russell Multifactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Russell and Vanguard Extended 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 Extended Market are associated (or correlated) with Xtrackers Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Russell has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Xtrackers Russell go up and down completely randomly.
Pair Corralation between Vanguard Extended and Xtrackers Russell
Considering the 90-day investment horizon Vanguard Extended Market is expected to generate 1.56 times more return on investment than Xtrackers Russell. However, Vanguard Extended is 1.56 times more volatile than Xtrackers Russell Multifactor. It trades about 0.41 of its potential returns per unit of risk. Xtrackers Russell Multifactor is currently generating about 0.38 per unit of risk. If you would invest 18,309 in Vanguard Extended Market on September 1, 2024 and sell it today you would earn a total of 2,193 from holding Vanguard Extended Market or generate 11.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard Extended Market vs. Xtrackers Russell Multifactor
Performance |
| Timeline |
| Vanguard Extended Market |
| Xtrackers Russell |
Vanguard Extended and Xtrackers Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and Xtrackers Russell
The main advantage of trading using opposite Vanguard Extended and Xtrackers Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, Xtrackers Russell 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 Xtrackers Russell will offset losses from the drop in Xtrackers Russell's long position.| Vanguard Extended vs. iShares Small Cap | Vanguard Extended vs. Invesco ESG NASDAQ | Vanguard Extended vs. Invesco ESG NASDAQ | Vanguard Extended vs. BlackRock Carbon Transition |
| Xtrackers Russell vs. Xtrackers FTSE Developed | Xtrackers Russell vs. John Hancock Multifactor | Xtrackers Russell vs. Xtrackers MSCI All | Xtrackers Russell vs. Xtrackers MSCI Eurozone |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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