Correlation Between Causeway Emerging and Vanguard Emerging
Can any of the company-specific risk be diversified away by investing in both Causeway 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 Causeway 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 Causeway Emerging Markets and Vanguard Emerging Markets, you can compare the effects of market volatilities on Causeway 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 Causeway Emerging with a short position of Vanguard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Causeway Emerging and Vanguard Emerging.
Diversification Opportunities for Causeway Emerging and Vanguard Emerging
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Causeway and Vanguard is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Causeway 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 Causeway 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 Causeway 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 Causeway Emerging i.e., Causeway Emerging and Vanguard Emerging go up and down completely randomly.
Pair Corralation between Causeway Emerging and Vanguard Emerging
Assuming the 90 days horizon Causeway Emerging Markets is expected to generate 1.16 times more return on investment than Vanguard Emerging. However, Causeway Emerging is 1.16 times more volatile than Vanguard Emerging Markets. It trades about 0.07 of its potential returns per unit of risk. Vanguard Emerging Markets is currently generating about 0.05 per unit of risk. If you would invest 872.00 in Causeway Emerging Markets on August 30, 2024 and sell it today you would earn a total of 277.00 from holding Causeway Emerging Markets or generate 31.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Causeway Emerging Markets vs. Vanguard Emerging Markets
Performance |
| Timeline |
| Causeway Emerging Markets |
| Vanguard Emerging Markets |
Causeway Emerging and Vanguard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Causeway Emerging and Vanguard Emerging
The main advantage of trading using opposite Causeway Emerging and Vanguard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Causeway 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.| Causeway Emerging vs. Vanguard Emerging Markets | Causeway Emerging vs. Vanguard Emerging Markets | Causeway Emerging vs. Vanguard Emerging Markets | Causeway Emerging vs. Vanguard Emerging Markets |
| Vanguard Emerging vs. Vanguard Developed Markets | Vanguard Emerging vs. Vanguard Reit Index | Vanguard Emerging vs. Vanguard Small Cap Index | Vanguard Emerging vs. Vanguard European Stock |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |