Correlation Between Amana Developing and Vanguard Emerging
Can any of the company-specific risk be diversified away by investing in both Amana Developing and Vanguard Emerging 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 Amana Developing and Vanguard Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amana Developing World and Vanguard Emerging Markets, you can compare the effects of market volatilities on Amana Developing and Vanguard Emerging 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 Amana Developing with a short position of Vanguard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amana Developing and Vanguard Emerging.
Diversification Opportunities for Amana Developing and Vanguard Emerging
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Amana and Vanguard is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Amana Developing World and Vanguard Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Emerging Markets and Amana Developing 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 Amana Developing World are associated (or correlated) with Vanguard Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Emerging Markets has no effect on the direction of Amana Developing i.e., Amana Developing and Vanguard Emerging go up and down completely randomly.
Pair Corralation between Amana Developing and Vanguard Emerging
Assuming the 90 days horizon Amana Developing World is expected to under-perform the Vanguard Emerging. In addition to that, Amana Developing is 1.12 times more volatile than Vanguard Emerging Markets. It trades about -0.09 of its total potential returns per unit of risk. Vanguard Emerging Markets is currently generating about -0.05 per unit of volatility. If you would invest 2,643 in Vanguard Emerging Markets on January 17, 2024 and sell it today you would lose (17.00) from holding Vanguard Emerging Markets or give up 0.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amana Developing World vs. Vanguard Emerging Markets
Performance |
| Timeline |
| Amana Developing World |
| Vanguard Emerging Markets |
Amana Developing and Vanguard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amana Developing and Vanguard Emerging
The main advantage of trading using opposite Amana Developing and Vanguard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amana Developing position performs unexpectedly, Vanguard Emerging 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 Vanguard Emerging will offset losses from the drop in Vanguard Emerging's long position.| Amana Developing vs. Amana Income Fund | Amana Developing vs. Amana Growth Fund | Amana Developing vs. Amana Participation Fund | Amana Developing vs. Azzad Ethical Fund |
| Vanguard Emerging vs. Vanguard Materials Index | Vanguard Emerging vs. Vanguard Limited Term Tax Exempt | Vanguard Emerging vs. Vanguard Limited Term Tax Exempt | Vanguard Emerging vs. Vanguard Global Minimum |
Check out your portfolio center.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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