Correlation Between Vanguard Global and Vanguard International

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

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

Diversification Opportunities for Vanguard Global and Vanguard International

0.94

Correlation Coefficient

Vanguard Global  Vanguard International

Almost no diversification

The 3 months correlation between Vanguard and Vanguard is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Global Ex Us and Vanguard International Dividen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard International and Vanguard Global 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 Global Ex Us are associated (or correlated) with Vanguard International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard International has no effect on the direction of Vanguard Global i.e., Vanguard Global and Vanguard International go up and down completely randomly.

Pair Corralation between Vanguard Global and Vanguard International

Assuming the 90 days horizon Vanguard Global Ex Us is expected to under-perform the Vanguard International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard Global Ex Us is 1.04 times less risky than Vanguard International. The mutual fund trades about -0.18 of its potential returns per unit of risk. The Vanguard International Dividend is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  4,085  in Vanguard International Dividend on October 11, 2024 and sell it today you would lose (170.00) from holding Vanguard International Dividend or give up 4.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	97.56%
Values	Daily Returns

Vanguard Global Ex Us  vs.  Vanguard International Dividen

Vanguard Global Ex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Global Ex Us has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Vanguard International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard International Dividend has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Vanguard Global and Vanguard International

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

The idea behind Vanguard Global Ex Us and Vanguard International Dividend 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.