Correlation Between Vanguard FTSE and WisdomTree Physical

Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and WisdomTree Physical 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 WisdomTree Physical 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 WisdomTree Physical Silver, you can compare the effects of market volatilities on Vanguard FTSE and WisdomTree Physical 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 WisdomTree Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and WisdomTree Physical.

Diversification Opportunities for Vanguard FTSE and WisdomTree Physical

0.08

Correlation Coefficient

Vanguard FTSE  WisdomTree Physical

Significant diversification

The 3 months correlation between Vanguard and WisdomTree is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE All World and WisdomTree Physical Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Physical 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 WisdomTree Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Physical has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and WisdomTree Physical go up and down completely randomly.

Pair Corralation between Vanguard FTSE and WisdomTree Physical

Assuming the 90 days trading horizon Vanguard FTSE All World is expected to under-perform the WisdomTree Physical. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard FTSE All World is 1.4 times less risky than WisdomTree Physical. The etf trades about -0.08 of its potential returns per unit of risk. The WisdomTree Physical Silver is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,602  in WisdomTree Physical Silver on December 24, 2024 and sell it today you would earn a total of  190.00  from holding WisdomTree Physical Silver or generate 7.3% return on investment over 90 days.

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

Vanguard FTSE All World  vs.  WisdomTree Physical Silver

Vanguard FTSE All

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard FTSE All World has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vanguard FTSE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

WisdomTree Physical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Physical Silver are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, WisdomTree Physical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Vanguard FTSE and WisdomTree Physical

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

The idea behind Vanguard FTSE All World and WisdomTree Physical Silver 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.