Correlation Between Vanguard FTSE and Research Affiliates

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

By analyzing existing cross correlation between Vanguard FTSE Emerging and Research Affiliates Deletions, you can compare the effects of market volatilities on Vanguard FTSE and Research Affiliates 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 Research Affiliates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Research Affiliates.

Diversification Opportunities for Vanguard FTSE and Research Affiliates

-0.44

Correlation Coefficient

Vanguard FTSE  Research Affiliates

Very good diversification

The 3 months correlation between Vanguard and Research is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Emerging and Research Affiliates Deletions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Research Affiliates 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 Emerging are associated (or correlated) with Research Affiliates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Research Affiliates has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Research Affiliates go up and down completely randomly.

Pair Corralation between Vanguard FTSE and Research Affiliates

Considering the 90-day investment horizon Vanguard FTSE is expected to generate 6.28 times less return on investment than Research Affiliates. But when comparing it to its historical volatility, Vanguard FTSE Emerging is 1.0 times less risky than Research Affiliates. It trades about 0.03 of its potential returns per unit of risk. Research Affiliates Deletions is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,477  in Research Affiliates Deletions on August 30, 2024 and sell it today you would earn a total of  301.00  from holding Research Affiliates Deletions or generate 12.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	89.06%
Values	Daily Returns

Vanguard FTSE Emerging  vs.  Research Affiliates Deletions

Vanguard FTSE Emerging

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE Emerging are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Vanguard FTSE is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Research Affiliates

Risk-Adjusted Performance

14 of 100

Good

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

Pair Trading with Vanguard FTSE and Research Affiliates

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

The idea behind Vanguard FTSE Emerging and Research Affiliates Deletions 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.