Correlation Between VanEck China and Vanguard Emerging
Can any of the company-specific risk be diversified away by investing in both VanEck China 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 VanEck China and Vanguard Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck China Bond and Vanguard Emerging Markets, you can compare the effects of market volatilities on VanEck China 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 VanEck China with a short position of Vanguard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck China and Vanguard Emerging.
Diversification Opportunities for VanEck China and Vanguard Emerging
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VanEck and Vanguard is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding VanEck China Bond 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 VanEck China 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 VanEck China Bond 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 VanEck China i.e., VanEck China and Vanguard Emerging go up and down completely randomly.
Pair Corralation between VanEck China and Vanguard Emerging
Given the investment horizon of 90 days VanEck China is expected to generate 2.9 times less return on investment than Vanguard Emerging. But when comparing it to its historical volatility, VanEck China Bond is 1.79 times less risky than Vanguard Emerging. It trades about 0.04 of its potential returns per unit of risk. Vanguard Emerging Markets is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,544 in Vanguard Emerging Markets on August 26, 2024 and sell it today you would earn a total of 889.00 from holding Vanguard Emerging Markets or generate 16.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck China Bond vs. Vanguard Emerging Markets
Performance |
| Timeline |
| VanEck China Bond |
| Vanguard Emerging Markets |
VanEck China and Vanguard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck China and Vanguard Emerging
The main advantage of trading using opposite VanEck China and Vanguard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck China 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.| VanEck China vs. Vanguard Emerging Markets | VanEck China vs. SPDR FTSE International | VanEck China vs. FT Vest Equity | VanEck China vs. Zillow Group Class |
| Vanguard Emerging vs. iShares JP Morgan | Vanguard Emerging vs. Invesco Emerging Markets | Vanguard Emerging vs. iShares JP Morgan | Vanguard Emerging vs. iShares JP Morgan |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Transaction History View history of all your transactions and understand their impact on performance |