Correlation Between Global X and Vanguard Information

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

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

Diversification Opportunities for Global X and Vanguard Information

0.9

Correlation Coefficient

Global X  Vanguard Information

Almost no diversification

The 3 months correlation between Global and Vanguard is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and Vanguard Information Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Information and Global X 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 Global X Funds are associated (or correlated) with Vanguard Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Information has no effect on the direction of Global X i.e., Global X and Vanguard Information go up and down completely randomly.

Pair Corralation between Global X and Vanguard Information

Given the investment horizon of 90 days Global X Funds is expected to generate 0.74 times more return on investment than Vanguard Information. However, Global X Funds is 1.35 times less risky than Vanguard Information. It trades about 0.16 of its potential returns per unit of risk. Vanguard Information Technology is currently generating about 0.1 per unit of risk. If you would invest  2,463  in Global X Funds on September 4, 2024 and sell it today you would earn a total of  1,442  from holding Global X Funds or generate 58.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	62.42%
Values	Daily Returns

Global X Funds  vs.  Vanguard Information Technolog

Global X Funds

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vanguard Information

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Information Technology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Vanguard Information unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global X and Vanguard Information

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

The idea behind Global X Funds and Vanguard Information Technology 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.