Correlation Between Vanguard Emerging and Centre Global

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

By analyzing existing cross correlation between Vanguard Emerging Markets and Centre Global Infrastructure, you can compare the effects of market volatilities on Vanguard Emerging and Centre Global 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 Emerging with a short position of Centre Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Emerging and Centre Global.

Diversification Opportunities for Vanguard Emerging and Centre Global

0.09

Correlation Coefficient

Vanguard Emerging  Centre Global

Significant diversification

The 3 months correlation between Vanguard and Centre is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Emerging Markets and Centre Global Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centre Global Infras and Vanguard 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 Vanguard Emerging Markets are associated (or correlated) with Centre Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centre Global Infras has no effect on the direction of Vanguard Emerging i.e., Vanguard Emerging and Centre Global go up and down completely randomly.

Pair Corralation between Vanguard Emerging and Centre Global

Assuming the 90 days horizon Vanguard Emerging is expected to generate 3.94 times less return on investment than Centre Global. But when comparing it to its historical volatility, Vanguard Emerging Markets is 2.29 times less risky than Centre Global. It trades about 0.17 of its potential returns per unit of risk. Centre Global Infrastructure is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  1,089  in Centre Global Infrastructure on September 5, 2024 and sell it today you would earn a total of  162.00  from holding Centre Global Infrastructure or generate 14.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.82%
Values	Daily Returns

Vanguard Emerging Markets  vs.  Centre Global Infrastructure

Vanguard Emerging Markets

Risk-Adjusted Performance

3 of 100

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 fundamental drivers, Vanguard Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Centre Global Infras

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Centre Global Infrastructure are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Centre Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vanguard Emerging and Centre Global

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

The idea behind Vanguard Emerging Markets and Centre Global Infrastructure 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 Anywhere module to track or share privately all of your investments from the convenience of any device.