Correlation Between Vanguard FTSE and Amundi Index

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

By analyzing existing cross correlation between Vanguard FTSE All World and Amundi Index Solutions, you can compare the effects of market volatilities on Vanguard FTSE and Amundi Index 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 FTSE with a short position of Amundi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Amundi Index.

Diversification Opportunities for Vanguard FTSE and Amundi Index

0.98

Correlation Coefficient

Vanguard FTSE  Amundi Index

Almost no diversification

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

Pair Corralation between Vanguard FTSE and Amundi Index

Assuming the 90 days trading horizon Vanguard FTSE All World is expected to generate 0.56 times more return on investment than Amundi Index. However, Vanguard FTSE All World is 1.79 times less risky than Amundi Index. It trades about -0.2 of its potential returns per unit of risk. Amundi Index Solutions is currently generating about -0.22 per unit of risk. If you would invest  13,538  in Vanguard FTSE All World on October 4, 2024 and sell it today you would lose (200.00) from holding Vanguard FTSE All World or give up 1.48% of portfolio value over 90 days.

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

Vanguard FTSE All World  vs.  Amundi Index Solutions

Vanguard FTSE All

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE All World are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Vanguard FTSE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Amundi Index Solutions

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi Index Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Amundi Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vanguard FTSE and Amundi Index

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

The idea behind Vanguard FTSE All World and Amundi Index Solutions 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.