Correlation Between Europacific Growth and Vanguard International
Can any of the company-specific risk be diversified away by investing in both Europacific Growth and Vanguard International 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 Europacific Growth and Vanguard International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europacific Growth Fund and Vanguard International Growth, you can compare the effects of market volatilities on Europacific Growth and Vanguard International 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 Europacific Growth with a short position of Vanguard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europacific Growth and Vanguard International.
Diversification Opportunities for Europacific Growth and Vanguard International
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Europacific and Vanguard is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Europacific Growth Fund and Vanguard International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard International and Europacific Growth 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 Europacific Growth Fund are associated (or correlated) with Vanguard International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard International has no effect on the direction of Europacific Growth i.e., Europacific Growth and Vanguard International go up and down completely randomly.
Pair Corralation between Europacific Growth and Vanguard International
Assuming the 90 days horizon Europacific Growth Fund is expected to under-perform the Vanguard International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Europacific Growth Fund is 1.2 times less risky than Vanguard International. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Vanguard International Growth is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 3,733 in Vanguard International Growth on September 13, 2024 and sell it today you would lose (86.00) from holding Vanguard International Growth or give up 2.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europacific Growth Fund vs. Vanguard International Growth
Performance |
| Timeline |
| Europacific Growth |
| Vanguard International |
Europacific Growth and Vanguard International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europacific Growth and Vanguard International
The main advantage of trading using opposite Europacific Growth and Vanguard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europacific Growth position performs unexpectedly, Vanguard International 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 International will offset losses from the drop in Vanguard International's long position.| Europacific Growth vs. Fidelity Managed Retirement | Europacific Growth vs. Columbia Moderate Growth | Europacific Growth vs. Sierra E Retirement | Europacific Growth vs. Strategic Allocation Moderate |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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