Correlation Between Vanguard and Amundi Index

Can any of the company-specific risk be diversified away by investing in both Vanguard 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 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 SP 500 and Amundi Index Solutions, you can compare the effects of market volatilities on Vanguard 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 with a short position of Amundi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and Amundi Index.

Diversification Opportunities for Vanguard and Amundi Index

0.93

Correlation Coefficient

Vanguard  Amundi Index

Almost no diversification

The 3 months correlation between Vanguard and Amundi is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 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 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 SP 500 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 i.e., Vanguard and Amundi Index go up and down completely randomly.

Pair Corralation between Vanguard and Amundi Index

Assuming the 90 days trading horizon Vanguard SP 500 is expected to generate 1.34 times more return on investment than Amundi Index. However, Vanguard is 1.34 times more volatile than Amundi Index Solutions. It trades about -0.04 of its potential returns per unit of risk. Amundi Index Solutions is currently generating about -0.19 per unit of risk. If you would invest  8,917  in Vanguard SP 500 on February 2, 2024 and sell it today you would lose (76.00) from holding Vanguard SP 500 or give up 0.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Vanguard SP 500  vs.  Amundi Index Solutions

Vanguard SP 500

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard SP 500 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Vanguard may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Amundi Index Solutions

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi Index Solutions are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Amundi Index may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Vanguard and Amundi Index

The main advantage of trading using opposite Vanguard and Amundi Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 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 SP 500 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 Global Correlations module to find global opportunities by holding instruments from different markets.