Correlation Between Emerging Markets and Vanguard Emerging
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 95.65% |
Values | Daily Returns |
EMERGING MARKETS FUND vs. VANGUARD EMERGING MARKETS
Performance |
Timeline |
Emerging Markets Fund |
Vanguard Emerging Markets |
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.Emerging Markets vs. State Farm Growth | Emerging Markets vs. Equity Growth Strategy | Emerging Markets vs. Equity Growth Strategy | Emerging Markets vs. Equity Growth Strategy |
Vanguard Emerging vs. State Farm Growth | Vanguard Emerging vs. Vanguard Materials Index | Vanguard Emerging vs. Vanguard Limited Term Tax Exempt | Vanguard Emerging vs. Vanguard Limited Term Tax Exempt |
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.
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