Correlation Between Vanguard 0 and Global X

Can any of the company-specific risk be diversified away by investing in both Vanguard 0 and Global X 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 0 and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vanguard 0 3 Month and Global X Funds, you can compare the effects of market volatilities on Vanguard 0 and Global X 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 0 with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 0 and Global X.

Diversification Opportunities for Vanguard 0 and Global X

0.41

Correlation Coefficient

Vanguard 0  Global X

Very weak diversification

The 3 months correlation between Vanguard and Global is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 0 3 Month and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds and Vanguard 0 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 0 3 Month are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Vanguard 0 i.e., Vanguard 0 and Global X go up and down completely randomly.

Pair Corralation between Vanguard 0 and Global X

Given the investment horizon of 90 days Vanguard 0 is expected to generate 2.66 times less return on investment than Global X. But when comparing it to its historical volatility, Vanguard 0 3 Month is 15.67 times less risky than Global X. It trades about 0.71 of its potential returns per unit of risk. Global X Funds is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4,765  in Global X Funds on February 3, 2025 and sell it today you would earn a total of  129.00  from holding Global X Funds or generate 2.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.63%
Values	Daily Returns

Vanguard 0 3 Month  vs.  Global X Funds

Vanguard 0 3

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard 0 3 Month are ranked lower than 56 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, Vanguard 0 is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Global X Funds

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Global X is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Vanguard 0 and Global X

The main advantage of trading using opposite Vanguard 0 and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 0 position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.

The idea behind Vanguard 0 3 Month and Global X Funds 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.