Correlation Between Vanguard Financials and Global X

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

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

Diversification Opportunities for Vanguard Financials and Global X

0.27

Correlation Coefficient

Vanguard Financials  Global X

Modest diversification

The 3 months correlation between Vanguard and Global is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Financials Index and Global X Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Blockchain and Vanguard Financials 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 Financials Index are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Blockchain has no effect on the direction of Vanguard Financials i.e., Vanguard Financials and Global X go up and down completely randomly.

Pair Corralation between Vanguard Financials and Global X

Considering the 90-day investment horizon Vanguard Financials Index is expected to generate 0.25 times more return on investment than Global X. However, Vanguard Financials Index is 4.07 times less risky than Global X. It trades about 0.02 of its potential returns per unit of risk. Global X Blockchain is currently generating about -0.11 per unit of risk. If you would invest  11,836  in Vanguard Financials Index on December 21, 2024 and sell it today you would earn a total of  102.00  from holding Vanguard Financials Index or generate 0.86% return on investment over 90 days.

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

Vanguard Financials Index  vs.  Global X Blockchain

Vanguard Financials Index

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Financials Index are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Vanguard Financials is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Global X Blockchain

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X Blockchain has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

Pair Trading with Vanguard Financials and Global X

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

The idea behind Vanguard Financials Index and Global X Blockchain 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.