Correlation Between Vanguard Emerging and First Investors
Can any of the company-specific risk be diversified away by investing in both Vanguard Emerging and First Investors 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 First Investors 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 First Investors Select, you can compare the effects of market volatilities on Vanguard Emerging and First Investors 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 First Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Emerging and First Investors.
Diversification Opportunities for Vanguard Emerging and First Investors
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vanguard and First is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Emerging Markets and First Investors Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Select 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 First Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Select has no effect on the direction of Vanguard Emerging i.e., Vanguard Emerging and First Investors go up and down completely randomly.
Pair Corralation between Vanguard Emerging and First Investors
Assuming the 90 days horizon Vanguard Emerging is expected to generate 1.53 times less return on investment than First Investors. But when comparing it to its historical volatility, Vanguard Emerging Markets is 1.06 times less risky than First Investors. It trades about 0.07 of its potential returns per unit of risk. First Investors Select is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,099 in First Investors Select on September 1, 2024 and sell it today you would earn a total of 193.00 from holding First Investors Select or generate 17.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
Vanguard Emerging Markets vs. First Investors Select
Performance |
| Timeline |
| Vanguard Emerging Markets |
| First Investors Select |
Vanguard Emerging and First Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Emerging and First Investors
The main advantage of trading using opposite Vanguard Emerging and First Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Emerging position performs unexpectedly, First Investors 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 First Investors will offset losses from the drop in First Investors' 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 |
| 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 |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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