Correlation Between Vanguard Canadian and Global X

Can any of the company-specific risk be diversified away by investing in both Vanguard Canadian 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 Canadian 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 Canadian Long Term and Global X 0 3, you can compare the effects of market volatilities on Vanguard Canadian 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 Canadian with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Canadian and Global X.

Diversification Opportunities for Vanguard Canadian and Global X

0.05

Correlation Coefficient

Vanguard Canadian  Global X

Significant diversification

The 3 months correlation between Vanguard and Global is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Canadian Long Term and Global X 0 3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X 0 and Vanguard Canadian 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 Canadian Long Term 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 0 has no effect on the direction of Vanguard Canadian i.e., Vanguard Canadian and Global X go up and down completely randomly.

Pair Corralation between Vanguard Canadian and Global X

Assuming the 90 days trading horizon Vanguard Canadian Long Term is expected to generate 38.76 times more return on investment than Global X. However, Vanguard Canadian is 38.76 times more volatile than Global X 0 3. It trades about 0.07 of its potential returns per unit of risk. Global X 0 3 is currently generating about 0.9 per unit of risk. If you would invest  2,080  in Vanguard Canadian Long Term on November 20, 2024 and sell it today you would earn a total of  67.00  from holding Vanguard Canadian Long Term or generate 3.22% return on investment over 90 days.

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

Vanguard Canadian Long Term  vs.  Global X 0 3

Vanguard Canadian Long

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Canadian Long Term are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Vanguard Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Global X 0

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Global X 0 3 are ranked lower than 70 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Global X is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Canadian and Global X

The main advantage of trading using opposite Vanguard Canadian and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Canadian 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 Canadian Long Term and Global X 0 3 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.