Correlation Between Vanguard International and Vanguard ESG

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

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

Diversification Opportunities for Vanguard International and Vanguard ESG

0.98

Correlation Coefficient

Vanguard International  Vanguard ESG

Almost no diversification

The 3 months correlation between Vanguard and Vanguard is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard International Dividen and Vanguard ESG International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard ESG Interna and Vanguard International 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 International Dividend are associated (or correlated) with Vanguard ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard ESG Interna has no effect on the direction of Vanguard International i.e., Vanguard International and Vanguard ESG go up and down completely randomly.

Pair Corralation between Vanguard International and Vanguard ESG

Given the investment horizon of 90 days Vanguard International Dividend is expected to under-perform the Vanguard ESG. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard International Dividend is 1.07 times less risky than Vanguard ESG. The etf trades about -0.18 of its potential returns per unit of risk. The Vanguard ESG International is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  6,083  in Vanguard ESG International on October 6, 2024 and sell it today you would lose (399.00) from holding Vanguard ESG International or give up 6.56% of portfolio value over 90 days.

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

Vanguard International Dividen  vs.  Vanguard ESG International

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 investors with long positions. Despite latest inconsistent performance, the Etf's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

Vanguard ESG Interna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard ESG International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Vanguard International and Vanguard ESG

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

The idea behind Vanguard International Dividend and Vanguard ESG International 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.