Correlation Between Roundhill Magnificent and Vanguard FTSE

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

By analyzing existing cross correlation between Roundhill Magnificent Seven and Vanguard FTSE All World, you can compare the effects of market volatilities on Roundhill Magnificent and Vanguard FTSE 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 Roundhill Magnificent with a short position of Vanguard FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roundhill Magnificent and Vanguard FTSE.

Diversification Opportunities for Roundhill Magnificent and Vanguard FTSE

-0.71

Correlation Coefficient

Roundhill Magnificent  Vanguard FTSE

Pay attention - limited upside

The 3 months correlation between Roundhill and Vanguard is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Roundhill Magnificent Seven and Vanguard FTSE All World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE All and Roundhill Magnificent 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 Roundhill Magnificent Seven are associated (or correlated) with Vanguard FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE All has no effect on the direction of Roundhill Magnificent i.e., Roundhill Magnificent and Vanguard FTSE go up and down completely randomly.

Pair Corralation between Roundhill Magnificent and Vanguard FTSE

Given the investment horizon of 90 days Roundhill Magnificent Seven is expected to under-perform the Vanguard FTSE. In addition to that, Roundhill Magnificent is 2.25 times more volatile than Vanguard FTSE All World. It trades about -0.14 of its total potential returns per unit of risk. Vanguard FTSE All World is currently generating about 0.13 per unit of volatility. If you would invest  5,723  in Vanguard FTSE All World on December 30, 2024 and sell it today you would earn a total of  379.00  from holding Vanguard FTSE All World or generate 6.62% return on investment over 90 days.

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

Roundhill Magnificent Seven  vs.  Vanguard FTSE All World

Roundhill Magnificent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Roundhill Magnificent Seven has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.

Vanguard FTSE All

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE All World are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, Vanguard FTSE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Roundhill Magnificent and Vanguard FTSE

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

The idea behind Roundhill Magnificent Seven and Vanguard FTSE All World 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.