Correlation Between International Investors and Vaneck Emerging
Can any of the company-specific risk be diversified away by investing in both International Investors and Vaneck 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 International Investors and Vaneck Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Investors Gold and Vaneck Emerging Markets, you can compare the effects of market volatilities on International Investors and Vaneck 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 International Investors with a short position of Vaneck Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Investors and Vaneck Emerging.
Diversification Opportunities for International Investors and Vaneck Emerging
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and Vaneck is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding International Investors Gold and Vaneck Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaneck Emerging Markets and International 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 International Investors Gold are associated (or correlated) with Vaneck Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaneck Emerging Markets has no effect on the direction of International Investors i.e., International Investors and Vaneck Emerging go up and down completely randomly.
Pair Corralation between International Investors and Vaneck Emerging
Assuming the 90 days horizon International Investors Gold is expected to under-perform the Vaneck Emerging. In addition to that, International Investors is 2.61 times more volatile than Vaneck Emerging Markets. It trades about -0.16 of its total potential returns per unit of risk. Vaneck Emerging Markets is currently generating about -0.2 per unit of volatility. If you would invest 1,540 in Vaneck Emerging Markets on September 1, 2024 and sell it today you would lose (53.00) from holding Vaneck Emerging Markets or give up 3.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
International Investors Gold vs. Vaneck Emerging Markets
Performance |
| Timeline |
| International Investors |
| Vaneck Emerging Markets |
International Investors and Vaneck Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Investors and Vaneck Emerging
The main advantage of trading using opposite International Investors and Vaneck Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Investors position performs unexpectedly, Vaneck 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 Vaneck Emerging will offset losses from the drop in Vaneck Emerging's long position.The idea behind International Investors Gold and Vaneck Emerging Markets pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Vaneck Emerging vs. Unconstrained Emerging Markets | Vaneck Emerging vs. Unconstrained Emerging Markets | Vaneck Emerging vs. Unconstrained Emerging Markets | Vaneck Emerging vs. Emerging Markets Fund |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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