Correlation Between Vanguard All and Vanguard FTSE

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

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

Diversification Opportunities for Vanguard All and Vanguard FTSE

0.99

Correlation Coefficient

Vanguard All  Vanguard FTSE

No risk reduction

The 3 months correlation between Vanguard and Vanguard is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard All Equity ETF and Vanguard FTSE Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Global and Vanguard All 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 All Equity ETF are associated (or correlated) with Vanguard FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Global has no effect on the direction of Vanguard All i.e., Vanguard All and Vanguard FTSE go up and down completely randomly.

Pair Corralation between Vanguard All and Vanguard FTSE

Assuming the 90 days trading horizon Vanguard All Equity ETF is expected to generate 0.91 times more return on investment than Vanguard FTSE. However, Vanguard All Equity ETF is 1.1 times less risky than Vanguard FTSE. It trades about 0.02 of its potential returns per unit of risk. Vanguard FTSE Global is currently generating about 0.01 per unit of risk. If you would invest  4,600  in Vanguard All Equity ETF on March 23, 2025 and sell it today you would earn a total of  70.00  from holding Vanguard All Equity ETF or generate 1.52% return on investment over 90 days.

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

Vanguard All Equity ETF  vs.  Vanguard FTSE Global

Vanguard All Equity

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard All Equity ETF are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Vanguard All is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Vanguard FTSE Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard FTSE Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Vanguard FTSE is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Vanguard All and Vanguard FTSE

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

The idea behind Vanguard All Equity ETF and Vanguard FTSE Global 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.

Check out your portfolio center.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.