Correlation Between First Investors and Vanguard Emerging
Can any of the company-specific risk be diversified away by investing in both First Investors 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 First Investors and Vanguard Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Investors Select and Vanguard Emerging Markets, you can compare the effects of market volatilities on First Investors 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 First Investors with a short position of Vanguard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Investors and Vanguard Emerging.
Diversification Opportunities for First Investors and Vanguard Emerging
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and Vanguard is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding First Investors Select 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 First Investors 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 First Investors Select 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 First Investors i.e., First Investors and Vanguard Emerging go up and down completely randomly.
Pair Corralation between First Investors and Vanguard Emerging
Assuming the 90 days horizon First Investors Select is expected to generate 1.04 times more return on investment than Vanguard Emerging. However, First Investors is 1.04 times more volatile than Vanguard Emerging Markets. It trades about 0.13 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 1,109 in First Investors Select on September 1, 2024 and sell it today you would earn a total of 183.00 from holding First Investors Select or generate 16.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
First Investors Select vs. Vanguard Emerging Markets
Performance |
| Timeline |
| First Investors Select |
| Vanguard Emerging Markets |
First Investors and Vanguard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Investors and Vanguard Emerging
The main advantage of trading using opposite First Investors and Vanguard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Investors 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.| First Investors vs. Tax Managed Mid Small | First Investors vs. Fisher Small Cap | First Investors vs. The Hartford Small | First Investors vs. Chartwell Small Cap |
| Vanguard Emerging vs. Vanguard Materials Index | Vanguard Emerging vs. Vanguard Limited Term Tax Exempt | Vanguard Emerging vs. Vanguard Limited Term Tax Exempt | Vanguard Emerging vs. Vanguard Global Minimum |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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