Correlation Between Vanguard FTSE and BlackRock Latin

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

By analyzing existing cross correlation between Vanguard FTSE Developed and BlackRock Latin American, you can compare the effects of market volatilities on Vanguard FTSE and BlackRock Latin 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 BlackRock Latin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and BlackRock Latin.

Diversification Opportunities for Vanguard FTSE and BlackRock Latin

0.68

Correlation Coefficient

Vanguard FTSE  BlackRock Latin

Poor diversification

The 3 months correlation between Vanguard and BlackRock is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and BlackRock Latin American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Latin American 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 Developed are associated (or correlated) with BlackRock Latin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Latin American has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and BlackRock Latin go up and down completely randomly.

Pair Corralation between Vanguard FTSE and BlackRock Latin

Assuming the 90 days trading horizon Vanguard FTSE Developed is expected to generate 0.73 times more return on investment than BlackRock Latin. However, Vanguard FTSE Developed is 1.38 times less risky than BlackRock Latin. It trades about -0.14 of its potential returns per unit of risk. BlackRock Latin American is currently generating about -0.22 per unit of risk. If you would invest  5,009  in Vanguard FTSE Developed on October 4, 2024 and sell it today you would lose (339.00) from holding Vanguard FTSE Developed or give up 6.77% of portfolio value over 90 days.

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

Vanguard FTSE Developed  vs.  BlackRock Latin American

Vanguard FTSE Developed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard FTSE Developed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

BlackRock Latin American

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Latin American has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Vanguard FTSE and BlackRock Latin

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

The idea behind Vanguard FTSE Developed and BlackRock Latin American 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 Valuation module to check real value of public entities based on technical and fundamental data.