Correlation Between Vanguard FTSE and MicroSectors Gold

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

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

Diversification Opportunities for Vanguard FTSE and MicroSectors Gold

-0.8

Correlation Coefficient

Vanguard FTSE  MicroSectors Gold

Pay attention - limited upside

The 3 months correlation between Vanguard and MicroSectors is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and MicroSectors Gold Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors Gold Miners 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 Developed are associated (or correlated) with MicroSectors Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors Gold Miners has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and MicroSectors Gold go up and down completely randomly.

Pair Corralation between Vanguard FTSE and MicroSectors Gold

Considering the 90-day investment horizon Vanguard FTSE Developed is expected to generate 0.15 times more return on investment than MicroSectors Gold. However, Vanguard FTSE Developed is 6.88 times less risky than MicroSectors Gold. It trades about 0.12 of its potential returns per unit of risk. MicroSectors Gold Miners is currently generating about -0.22 per unit of risk. If you would invest  5,585  in Vanguard FTSE Developed on June 9, 2025 and sell it today you would earn a total of  311.00  from holding Vanguard FTSE Developed or generate 5.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Vanguard FTSE Developed  vs.  MicroSectors Gold Miners

Vanguard FTSE Developed

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE Developed are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Vanguard FTSE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

MicroSectors Gold Miners

Risk-Adjusted Performance

Weakest

Over the last 90 days MicroSectors Gold Miners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in October 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with Vanguard FTSE and MicroSectors Gold

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

The idea behind Vanguard FTSE Developed and MicroSectors Gold Miners 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.