Correlation Between Vanguard Emerging and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both Vanguard Emerging and Ashmore 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 Vanguard Emerging and Ashmore Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Emerging Markets and Ashmore Emerging Markets, you can compare the effects of market volatilities on Vanguard Emerging and Ashmore 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 Vanguard Emerging with a short position of Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Emerging and Ashmore Emerging.
Diversification Opportunities for Vanguard Emerging and Ashmore Emerging
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vanguard and Ashmore is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Emerging Markets and Ashmore Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Emerging Markets and Vanguard Emerging 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 Vanguard Emerging Markets are associated (or correlated) with Ashmore Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Emerging Markets has no effect on the direction of Vanguard Emerging i.e., Vanguard Emerging and Ashmore Emerging go up and down completely randomly.
Pair Corralation between Vanguard Emerging and Ashmore Emerging
Assuming the 90 days horizon Vanguard Emerging Markets is expected to under-perform the Ashmore Emerging. In addition to that, Vanguard Emerging is 2.33 times more volatile than Ashmore Emerging Markets. It trades about -0.11 of its total potential returns per unit of risk. Ashmore Emerging Markets is currently generating about -0.1 per unit of volatility. If you would invest 1,064 in Ashmore Emerging Markets on September 1, 2024 and sell it today you would lose (8.00) from holding Ashmore Emerging Markets or give up 0.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard Emerging Markets vs. Ashmore Emerging Markets
Performance |
| Timeline |
| Vanguard Emerging Markets |
| Ashmore Emerging Markets |
Vanguard Emerging and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Emerging and Ashmore Emerging
The main advantage of trading using opposite Vanguard Emerging and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Emerging position performs unexpectedly, Ashmore 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 Ashmore Emerging will offset losses from the drop in Ashmore Emerging's long position.| 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 |
| Ashmore Emerging vs. Ashmore Emerging Markets | Ashmore Emerging vs. Ashmore Emerging Markets | Ashmore Emerging vs. Ashmore Emerging Markets | Ashmore Emerging vs. Ashmore Emerging Markets |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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