Correlation Between Vanguard Value and Global X

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

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

Diversification Opportunities for Vanguard Value and Global X

-0.62

Correlation Coefficient

Vanguard Value  Global X

Excellent diversification

The 3 months correlation between Vanguard and Global is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index and Global X Psychedelic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Psychedelic and Vanguard Value 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 Value Index are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Psychedelic has no effect on the direction of Vanguard Value i.e., Vanguard Value and Global X go up and down completely randomly.

Pair Corralation between Vanguard Value and Global X

Considering the 90-day investment horizon Vanguard Value is expected to generate 7.33 times less return on investment than Global X. But when comparing it to its historical volatility, Vanguard Value Index is 10.97 times less risky than Global X. It trades about 0.07 of its potential returns per unit of risk. Global X Psychedelic is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  559.00  in Global X Psychedelic on September 20, 2024 and sell it today you would earn a total of  11.00  from holding Global X Psychedelic or generate 1.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	7.46%
Values	Daily Returns

Vanguard Value Index  vs.  Global X Psychedelic

Vanguard Value Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Value Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Vanguard Value is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Global X Psychedelic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Psychedelic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Global X is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vanguard Value and Global X

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

The idea behind Vanguard Value Index and Global X Psychedelic 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..