Correlation Between Emerging Markets and Vanguard Emerging

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Emerging Markets 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 Emerging Markets and Vanguard Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Fund and Vanguard Emerging Markets, you can compare the effects of market volatilities on Emerging Markets 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 Emerging Markets with a short position of Vanguard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Vanguard Emerging.

Diversification Opportunities for Emerging Markets and Vanguard Emerging

0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Emerging and Vanguard is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding EMERGING MARKETS FUND 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 Emerging Markets 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 Emerging Markets Fund 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 Emerging Markets i.e., Emerging Markets and Vanguard Emerging go up and down completely randomly.

Pair Corralation between Emerging Markets and Vanguard Emerging

Assuming the 90 days horizon Emerging Markets Fund is expected to generate 1.12 times more return on investment than Vanguard Emerging. However, Emerging Markets is 1.12 times more volatile than Vanguard Emerging Markets. It trades about 0.14 of its potential returns per unit of risk. Vanguard Emerging Markets is currently generating about 0.02 per unit of risk. If you would invest  1,541  in Emerging Markets Fund on December 29, 2023 and sell it today you would earn a total of  34.00  from holding Emerging Markets Fund or generate 2.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.65%
ValuesDaily Returns

EMERGING MARKETS FUND  vs.  VANGUARD EMERGING MARKETS

 Performance 
       Timeline  
Emerging Markets Fund 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Emerging Markets Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Emerging Markets is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Vanguard Emerging Markets 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Emerging Markets are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Vanguard Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Emerging Markets and Vanguard Emerging Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Emerging Markets and Vanguard Emerging

The main advantage of trading using opposite Emerging Markets and Vanguard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets 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.
The idea behind Emerging Markets Fund and Vanguard Emerging Markets 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.
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

Other Complementary Tools

My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Commodity Channel
Use Commodity Channel Index to analyze current equity momentum
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Money Managers
Screen money managers from public funds and ETFs managed around the world