Correlation Between Vaneck Morningstar and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Vaneck Morningstar and Emerging Markets 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 Vaneck Morningstar and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vaneck Morningstar Wide and Emerging Markets Fund, you can compare the effects of market volatilities on Vaneck Morningstar and Emerging Markets 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 Vaneck Morningstar with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vaneck Morningstar and Emerging Markets.
Diversification Opportunities for Vaneck Morningstar and Emerging Markets
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vaneck and Emerging is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vaneck Morningstar Wide and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and Vaneck Morningstar 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 Vaneck Morningstar Wide are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Vaneck Morningstar i.e., Vaneck Morningstar and Emerging Markets go up and down completely randomly.
Pair Corralation between Vaneck Morningstar and Emerging Markets
Assuming the 90 days horizon Vaneck Morningstar Wide is expected to generate 1.15 times more return on investment than Emerging Markets. However, Vaneck Morningstar is 1.15 times more volatile than Emerging Markets Fund. It trades about 0.04 of its potential returns per unit of risk. Emerging Markets Fund is currently generating about 0.01 per unit of risk. If you would invest 2,800 in Vaneck Morningstar Wide on November 1, 2024 and sell it today you would earn a total of 475.00 from holding Vaneck Morningstar Wide or generate 16.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vaneck Morningstar Wide vs. Emerging Markets Fund
Performance |
| Timeline |
| Vaneck Morningstar Wide |
| Emerging Markets |
Vaneck Morningstar and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vaneck Morningstar and Emerging Markets
The main advantage of trading using opposite Vaneck Morningstar and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vaneck Morningstar position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.The idea behind Vaneck Morningstar Wide and Emerging Markets Fund 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.
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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