Correlation Between Vanguard FTSE and AB Disruptors

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

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

Diversification Opportunities for Vanguard FTSE and AB Disruptors

-0.36

Correlation Coefficient

Vanguard FTSE  AB Disruptors

Very good diversification

The 3 months correlation between Vanguard and FWD is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and AB Disruptors ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Disruptors ETF and Vanguard FTSE 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 Vanguard FTSE Developed are associated (or correlated) with AB Disruptors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Disruptors ETF has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and AB Disruptors go up and down completely randomly.

Pair Corralation between Vanguard FTSE and AB Disruptors

Considering the 90-day investment horizon Vanguard FTSE Developed is expected to generate 0.44 times more return on investment than AB Disruptors. However, Vanguard FTSE Developed is 2.25 times less risky than AB Disruptors. It trades about 0.15 of its potential returns per unit of risk. AB Disruptors ETF is currently generating about -0.07 per unit of risk. If you would invest  4,789  in Vanguard FTSE Developed on December 27, 2024 and sell it today you would earn a total of  388.00  from holding Vanguard FTSE Developed or generate 8.1% return on investment over 90 days.

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

Vanguard FTSE Developed  vs.  AB Disruptors ETF

Vanguard FTSE Developed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE Developed are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Vanguard FTSE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

AB Disruptors ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days AB Disruptors ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Vanguard FTSE and AB Disruptors

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

The idea behind Vanguard FTSE Developed and AB Disruptors ETF 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.