Correlation Between Tech Innovators and Vanguard FTSE

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

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

Diversification Opportunities for Tech Innovators and Vanguard FTSE

0.96

Correlation Coefficient

Tech Innovators  Vanguard FTSE

Almost no diversification

The 3 months correlation between Tech and Vanguard is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Tech Innovators Yield and Vanguard FTSE Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Developed and Tech Innovators 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 Tech Innovators Yield 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 Developed has no effect on the direction of Tech Innovators i.e., Tech Innovators and Vanguard FTSE go up and down completely randomly.

Pair Corralation between Tech Innovators and Vanguard FTSE

Assuming the 90 days trading horizon Tech Innovators Yield is expected to generate 2.19 times more return on investment than Vanguard FTSE. However, Tech Innovators is 2.19 times more volatile than Vanguard FTSE Developed. It trades about 0.35 of its potential returns per unit of risk. Vanguard FTSE Developed is currently generating about 0.24 per unit of risk. If you would invest  1,391  in Tech Innovators Yield on April 21, 2025 and sell it today you would earn a total of  558.00  from holding Tech Innovators Yield or generate 40.12% return on investment over 90 days.

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

Tech Innovators Yield  vs.  Vanguard FTSE Developed

Tech Innovators Yield

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Tech Innovators Yield are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Tech Innovators exhibited solid returns over the last few months and may actually be approaching a breakup point.

Vanguard FTSE Developed

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE Developed are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vanguard FTSE may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Tech Innovators and Vanguard FTSE

The main advantage of trading using opposite Tech Innovators and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tech Innovators 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 Tech Innovators Yield and Vanguard FTSE Developed 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.