Correlation Between Vanguard Emerging and Aberdeen Emerging
Can any of the company-specific risk be diversified away by investing in both Vanguard Emerging and Aberdeen 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 Aberdeen 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 Aberdeen Emerging Markets, you can compare the effects of market volatilities on Vanguard Emerging and Aberdeen 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 Aberdeen Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Emerging and Aberdeen Emerging.
Diversification Opportunities for Vanguard Emerging and Aberdeen Emerging
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Aberdeen is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Emerging Markets and Aberdeen Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen 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 Aberdeen Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Emerging Markets has no effect on the direction of Vanguard Emerging i.e., Vanguard Emerging and Aberdeen Emerging go up and down completely randomly.
Pair Corralation between Vanguard Emerging and Aberdeen Emerging
Assuming the 90 days horizon Vanguard Emerging Markets is expected to under-perform the Aberdeen Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard Emerging Markets is 1.05 times less risky than Aberdeen Emerging. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Aberdeen Emerging Markets is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 1,380 in Aberdeen Emerging Markets on September 1, 2024 and sell it today you would lose (23.00) from holding Aberdeen Emerging Markets or give up 1.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard Emerging Markets vs. Aberdeen Emerging Markets
Performance |
| Timeline |
| Vanguard Emerging Markets |
| Aberdeen Emerging Markets |
Vanguard Emerging and Aberdeen Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Emerging and Aberdeen Emerging
The main advantage of trading using opposite Vanguard Emerging and Aberdeen Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Emerging position performs unexpectedly, Aberdeen 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 Aberdeen Emerging will offset losses from the drop in Aberdeen 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 |
| Aberdeen Emerging vs. Aberdeen Emerging Markets | Aberdeen Emerging vs. Aberdeen Emerging Markets | Aberdeen Emerging vs. Aberdeen Gbl Eq | Aberdeen Emerging vs. Aberdeen Gbl Eq |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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