Correlation Between Wasatch Emerging and Vanguard Emerging
Can any of the company-specific risk be diversified away by investing in both Wasatch Emerging 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 Wasatch Emerging and Vanguard Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wasatch Emerging Markets and Vanguard Emerging Markets, you can compare the effects of market volatilities on Wasatch Emerging 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 Wasatch Emerging with a short position of Vanguard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wasatch Emerging and Vanguard Emerging.
Diversification Opportunities for Wasatch Emerging and Vanguard Emerging
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wasatch and Vanguard is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Emerging Markets 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 Wasatch Emerging 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 Wasatch Emerging Markets 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 Wasatch Emerging i.e., Wasatch Emerging and Vanguard Emerging go up and down completely randomly.
Pair Corralation between Wasatch Emerging and Vanguard Emerging
Assuming the 90 days horizon Wasatch Emerging Markets is expected to under-perform the Vanguard Emerging. In addition to that, Wasatch Emerging is 1.11 times more volatile than Vanguard Emerging Markets. It trades about -0.21 of its total potential returns per unit of risk. Vanguard Emerging Markets is currently generating about -0.08 per unit of volatility. If you would invest 2,642 in Vanguard Emerging Markets on January 24, 2024 and sell it today you would lose (26.00) from holding Vanguard Emerging Markets or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wasatch Emerging Markets vs. Vanguard Emerging Markets
Performance |
| Timeline |
| Wasatch Emerging Markets |
| Vanguard Emerging Markets |
Wasatch Emerging and Vanguard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wasatch Emerging and Vanguard Emerging
The main advantage of trading using opposite Wasatch Emerging and Vanguard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wasatch Emerging 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.| Wasatch Emerging vs. Wasatch Emerging Markets | Wasatch Emerging vs. Wasatch International Opportunities | Wasatch Emerging vs. Wasatch Global Opportunities | Wasatch Emerging vs. Wasatch Micro Cap |
| 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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