Correlation Between Acadian Emerging and Vanguard Explorer
Can any of the company-specific risk be diversified away by investing in both Acadian Emerging and Vanguard Explorer 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 Acadian Emerging and Vanguard Explorer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acadian Emerging Markets and Vanguard Explorer Fund, you can compare the effects of market volatilities on Acadian Emerging and Vanguard Explorer 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 Acadian Emerging with a short position of Vanguard Explorer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acadian Emerging and Vanguard Explorer.
Diversification Opportunities for Acadian Emerging and Vanguard Explorer
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Acadian and VANGUARD is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Acadian Emerging Markets and Vanguard Explorer Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Explorer and Acadian 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 Acadian Emerging Markets are associated (or correlated) with Vanguard Explorer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Explorer has no effect on the direction of Acadian Emerging i.e., Acadian Emerging and Vanguard Explorer go up and down completely randomly.
Pair Corralation between Acadian Emerging and Vanguard Explorer
Assuming the 90 days horizon Acadian Emerging Markets is expected to generate 0.74 times more return on investment than Vanguard Explorer. However, Acadian Emerging Markets is 1.34 times less risky than Vanguard Explorer. It trades about 0.08 of its potential returns per unit of risk. Vanguard Explorer Fund is currently generating about 0.06 per unit of risk. If you would invest 1,689 in Acadian Emerging Markets on August 30, 2024 and sell it today you would earn a total of 659.00 from holding Acadian Emerging Markets or generate 39.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Acadian Emerging Markets vs. Vanguard Explorer Fund
Performance |
| Timeline |
| Acadian Emerging Markets |
| Vanguard Explorer |
Acadian Emerging and Vanguard Explorer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acadian Emerging and Vanguard Explorer
The main advantage of trading using opposite Acadian Emerging and Vanguard Explorer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acadian Emerging position performs unexpectedly, Vanguard Explorer 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 Explorer will offset losses from the drop in Vanguard Explorer's long position.| Acadian Emerging vs. International Stock Fund | Acadian Emerging vs. Pear Tree Polaris | Acadian Emerging vs. Jpmorgan Value Advantage | Acadian Emerging vs. Bridge Builder Smallmid |
| Vanguard Explorer vs. Vanguard International Growth | Vanguard Explorer vs. Vanguard Windsor Ii | Vanguard Explorer vs. Vanguard Primecap Fund | Vanguard Explorer vs. Vanguard Growth Fund |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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