Correlation Between Western Asset and Vanguard Emerging
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Vanguard Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Managed and Vanguard Emerging Markets, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Vanguard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Vanguard Emerging.
Diversification Opportunities for Western Asset and Vanguard Emerging
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Vanguard is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Managed 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 Western Asset 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 Western Asset Managed 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 Western Asset i.e., Western Asset and Vanguard Emerging go up and down completely randomly.
Pair Corralation between Western Asset and Vanguard Emerging
Assuming the 90 days horizon Western Asset Managed is expected to under-perform the Vanguard Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Managed is 1.48 times less risky than Vanguard Emerging. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Vanguard Emerging Markets is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,331 in Vanguard Emerging Markets on November 3, 2024 and sell it today you would earn a total of 16.00 from holding Vanguard Emerging Markets or generate 0.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Managed vs. Vanguard Emerging Markets
Performance |
| Timeline |
| Western Asset Managed |
| Vanguard Emerging Markets |
Western Asset and Vanguard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Vanguard Emerging
The main advantage of trading using opposite Western Asset and Vanguard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Rbb Fund | Western Asset vs. Qs Large Cap | Western Asset vs. Ab Small Cap | Western Asset vs. T Rowe Price |
| Vanguard Emerging vs. Fidelity Advisor Financial | Vanguard Emerging vs. Financial Industries Fund | Vanguard Emerging vs. Angel Oak Financial | Vanguard Emerging vs. Ab Government Exchange |
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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