Correlation Between Global X and Vanguard Intermediate

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

By analyzing existing cross correlation between Global X Short Term and Vanguard Intermediate Term Treasury, you can compare the effects of market volatilities on Global X and Vanguard Intermediate 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 Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Vanguard Intermediate.

Diversification Opportunities for Global X and Vanguard Intermediate

0.37

Correlation Coefficient

Global X  Vanguard Intermediate

Weak diversification

The 3 months correlation between Global and Vanguard is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Global X Short Term and Vanguard Intermediate Term Tre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Intermediate 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 Short Term are associated (or correlated) with Vanguard Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Intermediate has no effect on the direction of Global X i.e., Global X and Vanguard Intermediate go up and down completely randomly.

Pair Corralation between Global X and Vanguard Intermediate

Given the investment horizon of 90 days Global X is expected to generate 1.93 times less return on investment than Vanguard Intermediate. But when comparing it to its historical volatility, Global X Short Term is 4.24 times less risky than Vanguard Intermediate. It trades about 0.43 of its potential returns per unit of risk. Vanguard Intermediate Term Treasury is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  5,805  in Vanguard Intermediate Term Treasury on September 13, 2024 and sell it today you would earn a total of  56.00  from holding Vanguard Intermediate Term Treasury or generate 0.96% return on investment over 90 days.

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

Global X Short Term  vs.  Vanguard Intermediate Term Tre

Global X Short

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Short Term are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Global X is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Vanguard Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Intermediate Term Treasury has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Vanguard Intermediate is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Global X and Vanguard Intermediate

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

The idea behind Global X Short Term and Vanguard Intermediate Term Treasury 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.