Correlation Between Barings Emerging and Vanguard Developed
Can any of the company-specific risk be diversified away by investing in both Barings Emerging and Vanguard Developed 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 Barings Emerging and Vanguard Developed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Emerging Markets and Vanguard Developed Markets, you can compare the effects of market volatilities on Barings Emerging and Vanguard Developed 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 Barings Emerging with a short position of Vanguard Developed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Vanguard Developed.
Diversification Opportunities for Barings Emerging and Vanguard Developed
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and VANGUARD is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Vanguard Developed Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Developed and Barings 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 Barings Emerging Markets are associated (or correlated) with Vanguard Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Developed has no effect on the direction of Barings Emerging i.e., Barings Emerging and Vanguard Developed go up and down completely randomly.
Pair Corralation between Barings Emerging and Vanguard Developed
Assuming the 90 days horizon Barings Emerging is expected to generate 1.8 times less return on investment than Vanguard Developed. But when comparing it to its historical volatility, Barings Emerging Markets is 2.14 times less risky than Vanguard Developed. It trades about 0.07 of its potential returns per unit of risk. Vanguard Developed Markets is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,304 in Vanguard Developed Markets on September 2, 2024 and sell it today you would earn a total of 312.00 from holding Vanguard Developed Markets or generate 23.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Emerging Markets vs. Vanguard Developed Markets
Performance |
| Timeline |
| Barings Emerging Markets |
| Vanguard Developed |
Barings Emerging and Vanguard Developed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and Vanguard Developed
The main advantage of trading using opposite Barings Emerging and Vanguard Developed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, Vanguard Developed 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 Developed will offset losses from the drop in Vanguard Developed's long position.| Barings Emerging vs. Vy Goldman Sachs | Barings Emerging vs. Oppenheimer Gold Special | Barings Emerging vs. Gabelli Gold Fund | Barings Emerging vs. James Balanced Golden |
| Vanguard Developed vs. Vanguard Emerging Markets | Vanguard Developed vs. Vanguard Small Cap Index | Vanguard Developed vs. Vanguard Total Bond | Vanguard Developed vs. Vanguard Mid Cap Index |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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