Correlation Between Emerging Markets and Us Vector
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Us Vector 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 Emerging Markets and Us Vector into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets E and Us Vector Equity, you can compare the effects of market volatilities on Emerging Markets and Us Vector 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 Emerging Markets with a short position of Us Vector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Us Vector.
Diversification Opportunities for Emerging Markets and Us Vector
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Emerging and DFVEX is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets E and Us Vector Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Vector Equity and Emerging Markets 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 Emerging Markets E are associated (or correlated) with Us Vector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Vector Equity has no effect on the direction of Emerging Markets i.e., Emerging Markets and Us Vector go up and down completely randomly.
Pair Corralation between Emerging Markets and Us Vector
Assuming the 90 days horizon Emerging Markets E is expected to under-perform the Us Vector. But the mutual fund apears to be less risky and, when comparing its historical volatility, Emerging Markets E is 1.4 times less risky than Us Vector. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Us Vector Equity is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 2,692 in Us Vector Equity on September 1, 2024 and sell it today you would earn a total of 215.00 from holding Us Vector Equity or generate 7.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Emerging Markets E vs. Us Vector Equity
Performance |
| Timeline |
| Emerging Markets E |
| Us Vector Equity |
Emerging Markets and Us Vector Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Us Vector
The main advantage of trading using opposite Emerging Markets and Us Vector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Us Vector 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 Us Vector will offset losses from the drop in Us Vector's long position.| Emerging Markets vs. International E Equity | Emerging Markets vs. Dfa International Small | Emerging Markets vs. Us E Equity | Emerging Markets vs. Us Large Cap |
| Us Vector vs. T Rowe Price | Us Vector vs. Oklahoma Municipal Fund | Us Vector vs. Ishares Municipal Bond | Us Vector vs. T Rowe Price |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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