Correlation Between ZKB Gold and Vanguard
Can any of the company-specific risk be diversified away by investing in both ZKB Gold and Vanguard 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 ZKB Gold and Vanguard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZKB Gold ETF and Vanguard SP 500, you can compare the effects of market volatilities on ZKB Gold and Vanguard 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 ZKB Gold with a short position of Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZKB Gold and Vanguard.
Diversification Opportunities for ZKB Gold and Vanguard
Very poor diversification
The 3 months correlation between ZKB and Vanguard is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding ZKB Gold ETF and Vanguard SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP 500 and ZKB Gold 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 ZKB Gold ETF are associated (or correlated) with Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard SP 500 has no effect on the direction of ZKB Gold i.e., ZKB Gold and Vanguard go up and down completely randomly.
Pair Corralation between ZKB Gold and Vanguard
Assuming the 90 days trading horizon ZKB Gold is expected to generate 28.55 times less return on investment than Vanguard. In addition to that, ZKB Gold is 1.11 times more volatile than Vanguard SP 500. It trades about 0.01 of its total potential returns per unit of risk. Vanguard SP 500 is currently generating about 0.36 per unit of volatility. If you would invest 9,379 in Vanguard SP 500 on September 5, 2024 and sell it today you would earn a total of 803.00 from holding Vanguard SP 500 or generate 8.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
ZKB Gold ETF vs. Vanguard SP 500
Performance |
| Timeline |
| ZKB Gold ETF |
| Vanguard SP 500 |
ZKB Gold and Vanguard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZKB Gold and Vanguard
The main advantage of trading using opposite ZKB Gold and Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZKB Gold position performs unexpectedly, Vanguard 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 Vanguard will offset losses from the drop in Vanguard's long position.| ZKB Gold vs. Vanguard SP 500 | ZKB Gold vs. iShares Core SP | ZKB Gold vs. Lyxor Japan UCITS | ZKB Gold vs. iShares SP 500 |
| Vanguard vs. Vanguard FTSE Emerging | Vanguard vs. Vanguard USD Emerging | Vanguard vs. Vanguard FTSE Developed | Vanguard vs. Vanguard FTSE Japan |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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