Correlation Between Vanguard Global and Pace International

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Can any of the company-specific risk be diversified away by investing in both Vanguard Global and Pace International 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 Global and Pace International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Global Equity and Pace International Emerging, you can compare the effects of market volatilities on Vanguard Global and Pace International 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 Global with a short position of Pace International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Global and Pace International.

Diversification Opportunities for Vanguard Global and Pace International

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Vanguard and Pace is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Global Equity and Pace International Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace International and Vanguard Global 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 Global Equity are associated (or correlated) with Pace International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace International has no effect on the direction of Vanguard Global i.e., Vanguard Global and Pace International go up and down completely randomly.

Pair Corralation between Vanguard Global and Pace International

Assuming the 90 days horizon Vanguard Global is expected to generate 1.09 times less return on investment than Pace International. In addition to that, Vanguard Global is 1.07 times more volatile than Pace International Emerging. It trades about 0.21 of its total potential returns per unit of risk. Pace International Emerging is currently generating about 0.25 per unit of volatility. If you would invest  1,424  in Pace International Emerging on May 30, 2025 and sell it today you would earn a total of  156.00  from holding Pace International Emerging or generate 10.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.41%
ValuesDaily Returns

Vanguard Global Equity  vs.  Pace International Emerging

 Performance 
       Timeline  
Vanguard Global Equity 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Global Equity are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Vanguard Global may actually be approaching a critical reversion point that can send shares even higher in September 2025.
Pace International 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Pace International Emerging are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Pace International may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Vanguard Global and Pace International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vanguard Global and Pace International

The main advantage of trading using opposite Vanguard Global and Pace International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Global position performs unexpectedly, Pace International 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 Pace International will offset losses from the drop in Pace International's long position.
The idea behind Vanguard Global Equity and Pace International Emerging 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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