Correlation Between Vanguard FTSE and BetaShares Crypto

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

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

Diversification Opportunities for Vanguard FTSE and BetaShares Crypto

-0.41

Correlation Coefficient

Vanguard FTSE  BetaShares Crypto

Very good diversification

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

Pair Corralation between Vanguard FTSE and BetaShares Crypto

Assuming the 90 days trading horizon Vanguard FTSE is expected to generate 123.23 times less return on investment than BetaShares Crypto. But when comparing it to its historical volatility, Vanguard FTSE Europe is 6.59 times less risky than BetaShares Crypto. It trades about 0.01 of its potential returns per unit of risk. BetaShares Crypto Innovators is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  450.00  in BetaShares Crypto Innovators on September 14, 2024 and sell it today you would earn a total of  364.00  from holding BetaShares Crypto Innovators or generate 80.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Vanguard FTSE Europe  vs.  BetaShares Crypto Innovators

Vanguard FTSE Europe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard FTSE Europe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vanguard FTSE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

BetaShares Crypto

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Crypto Innovators are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BetaShares Crypto unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard FTSE and BetaShares Crypto

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

The idea behind Vanguard FTSE Europe and BetaShares Crypto Innovators 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.