Correlation Between Vanguard Total and ETFS Metal

Can any of the company-specific risk be diversified away by investing in both Vanguard Total and ETFS Metal 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 Total and ETFS Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vanguard Total Bond and ETFS Metal Securities, you can compare the effects of market volatilities on Vanguard Total and ETFS Metal 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 Total with a short position of ETFS Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and ETFS Metal.

Diversification Opportunities for Vanguard Total and ETFS Metal

-0.21

Correlation Coefficient

Vanguard Total  ETFS Metal

Very good diversification

The 3 months correlation between Vanguard and ETFS is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and ETFS Metal Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Metal Securities and Vanguard Total 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 Total Bond are associated (or correlated) with ETFS Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Metal Securities has no effect on the direction of Vanguard Total i.e., Vanguard Total and ETFS Metal go up and down completely randomly.

Pair Corralation between Vanguard Total and ETFS Metal

If you would invest  7,133  in Vanguard Total Bond on December 5, 2024 and sell it today you would earn a total of  207.00  from holding Vanguard Total Bond or generate 2.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Vanguard Total Bond  vs.  ETFS Metal Securities

Vanguard Total Bond

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Bond are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Vanguard Total is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

ETFS Metal Securities

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ETFS Metal Securities are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ETFS Metal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vanguard Total and ETFS Metal

The main advantage of trading using opposite Vanguard Total and ETFS Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, ETFS Metal 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 ETFS Metal will offset losses from the drop in ETFS Metal's long position.

The idea behind Vanguard Total Bond and ETFS Metal Securities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.