Correlation Between ETFS Metal and Vanguard Total

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

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

Diversification Opportunities for ETFS Metal and Vanguard Total

0.53

Correlation Coefficient

ETFS Metal  Vanguard Total

Very weak diversification

The 3 months correlation between ETFS and Vanguard is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Metal Securities and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and ETFS Metal 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 ETFS Metal Securities are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of ETFS Metal i.e., ETFS Metal and Vanguard Total go up and down completely randomly.

Pair Corralation between ETFS Metal and Vanguard Total

Assuming the 90 days horizon ETFS Metal Securities is expected to generate 2.95 times more return on investment than Vanguard Total. However, ETFS Metal is 2.95 times more volatile than Vanguard Total Stock. It trades about 0.15 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.38 per unit of risk. If you would invest  24,025  in ETFS Metal Securities on September 18, 2024 and sell it today you would earn a total of  875.00  from holding ETFS Metal Securities or generate 3.64% return on investment over 90 days.

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

ETFS Metal Securities  vs.  Vanguard Total Stock

ETFS Metal Securities

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ETFS Metal Securities are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, ETFS Metal reported solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Total Stock

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Vanguard Total may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ETFS Metal and Vanguard Total

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

The idea behind ETFS Metal Securities and Vanguard Total Stock 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..