Correlation Between Vanguard Russell and Vanguard ESG

Can any of the company-specific risk be diversified away by investing in both Vanguard Russell 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 Russell 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 Russell 1000 and Vanguard ESG International, you can compare the effects of market volatilities on Vanguard Russell 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 Russell with a short position of Vanguard ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Russell and Vanguard ESG.

Diversification Opportunities for Vanguard Russell and Vanguard ESG

-0.45

Correlation Coefficient

Vanguard Russell  Vanguard ESG

Very good diversification

The 3 months correlation between Vanguard and Vanguard is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Russell 1000 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 Russell 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 Russell 1000 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 Russell i.e., Vanguard Russell and Vanguard ESG go up and down completely randomly.

Pair Corralation between Vanguard Russell and Vanguard ESG

Given the investment horizon of 90 days Vanguard Russell 1000 is expected to under-perform the Vanguard ESG. In addition to that, Vanguard Russell is 1.63 times more volatile than Vanguard ESG International. It trades about -0.13 of its total potential returns per unit of risk. Vanguard ESG International is currently generating about 0.14 per unit of volatility. If you would invest  5,700  in Vanguard ESG International on December 21, 2024 and sell it today you would earn a total of  404.00  from holding Vanguard ESG International or generate 7.09% return on investment over 90 days.

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

Vanguard Russell 1000  vs.  Vanguard ESG International

Vanguard Russell 1000

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Russell 1000 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Vanguard ESG Interna

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard ESG International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Vanguard ESG may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Vanguard Russell and Vanguard ESG

The main advantage of trading using opposite Vanguard Russell and Vanguard ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Russell 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 Russell 1000 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.