Correlation Between Xtrackers and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both Xtrackers 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 Xtrackers and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers SP 500 and Vanguard Total Stock, you can compare the effects of market volatilities on Xtrackers 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 Xtrackers with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers and Vanguard Total.
Diversification Opportunities for Xtrackers and Vanguard Total
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xtrackers and Vanguard is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers SP 500 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 Xtrackers 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 Xtrackers SP 500 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 Xtrackers i.e., Xtrackers and Vanguard Total go up and down completely randomly.
Pair Corralation between Xtrackers and Vanguard Total
Given the investment horizon of 90 days Xtrackers SP 500 is expected to under-perform the Vanguard Total. In addition to that, Xtrackers is 1.0 times more volatile than Vanguard Total Stock. It trades about -0.09 of its total potential returns per unit of risk. Vanguard Total Stock is currently generating about -0.09 per unit of volatility. If you would invest 28,980 in Vanguard Total Stock on December 30, 2024 and sell it today you would lose (1,637) from holding Vanguard Total Stock or give up 5.65% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Xtrackers SP 500 vs. Vanguard Total Stock
Performance |
Timeline |
Xtrackers SP 500 |
Vanguard Total Stock |
Xtrackers and Vanguard Total Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Xtrackers and Vanguard Total
The main advantage of trading using opposite Xtrackers and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers 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.Xtrackers vs. Xtrackers MSCI USA | Xtrackers vs. iShares ESG MSCI | Xtrackers vs. SPDR SP 500 | Xtrackers vs. iShares MSCI USA |
Vanguard Total vs. Vanguard SP 500 | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Real Estate | Vanguard Total vs. Vanguard Total Bond |
Check out your portfolio center.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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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