Correlation Between Vanguard Ultra and Macquarie ETF

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

By analyzing existing cross correlation between Vanguard Ultra Short Bond and Macquarie ETF Trust, you can compare the effects of market volatilities on Vanguard Ultra and Macquarie ETF 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 Ultra with a short position of Macquarie ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Ultra and Macquarie ETF.

Diversification Opportunities for Vanguard Ultra and Macquarie ETF

0.81

Correlation Coefficient

Vanguard Ultra  Macquarie ETF

Very poor diversification

The 3 months correlation between Vanguard and Macquarie is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Ultra Short Bond and Macquarie ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie ETF Trust and Vanguard Ultra 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 Ultra Short Bond are associated (or correlated) with Macquarie ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie ETF Trust has no effect on the direction of Vanguard Ultra i.e., Vanguard Ultra and Macquarie ETF go up and down completely randomly.

Pair Corralation between Vanguard Ultra and Macquarie ETF

Given the investment horizon of 90 days Vanguard Ultra Short Bond is expected to generate 0.55 times more return on investment than Macquarie ETF. However, Vanguard Ultra Short Bond is 1.83 times less risky than Macquarie ETF. It trades about 0.53 of its potential returns per unit of risk. Macquarie ETF Trust is currently generating about 0.16 per unit of risk. If you would invest  4,920  in Vanguard Ultra Short Bond on December 30, 2024 and sell it today you would earn a total of  64.00  from holding Vanguard Ultra Short Bond or generate 1.3% return on investment over 90 days.

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

Vanguard Ultra Short Bond  vs.  Macquarie ETF Trust

Vanguard Ultra Short

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Ultra Short Bond are ranked lower than 41 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Vanguard Ultra is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Macquarie ETF Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie ETF Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Macquarie ETF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Ultra and Macquarie ETF

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

The idea behind Vanguard Ultra Short Bond and Macquarie ETF Trust 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.