Correlation Between Global X and Vanguard Information

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

By analyzing existing cross correlation between Global X FinTech and Vanguard Information Technology, you can compare the effects of market volatilities on Global X and Vanguard Information 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 Global X with a short position of Vanguard Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Vanguard Information.

Diversification Opportunities for Global X and Vanguard Information

0.73

Correlation Coefficient

Global X  Vanguard Information

Poor diversification

The 3 months correlation between Global and Vanguard is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Global X FinTech and Vanguard Information Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Information and Global X 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 Global X FinTech are associated (or correlated) with Vanguard Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Information has no effect on the direction of Global X i.e., Global X and Vanguard Information go up and down completely randomly.

Pair Corralation between Global X and Vanguard Information

Given the investment horizon of 90 days Global X FinTech is expected to generate 0.96 times more return on investment than Vanguard Information. However, Global X FinTech is 1.05 times less risky than Vanguard Information. It trades about -0.12 of its potential returns per unit of risk. Vanguard Information Technology is currently generating about -0.12 per unit of risk. If you would invest  3,143  in Global X FinTech on December 29, 2024 and sell it today you would lose (374.00) from holding Global X FinTech or give up 11.9% of portfolio value over 90 days.

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

Global X FinTech  vs.  Vanguard Information Technolog

Global X FinTech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X FinTech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Vanguard Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Information Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Global X and Vanguard Information

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

The idea behind Global X FinTech and Vanguard Information Technology 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.