Correlation Between Vanguard Emerging and Vanguard Core
Can any of the company-specific risk be diversified away by investing in both Vanguard Emerging and Vanguard Core 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 Vanguard Core 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 Vanguard E Bond, you can compare the effects of market volatilities on Vanguard Emerging and Vanguard Core 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 Vanguard Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Emerging and Vanguard Core.
Diversification Opportunities for Vanguard Emerging and Vanguard Core
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Vanguard is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Emerging Markets and Vanguard E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard E Bond 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 Vanguard Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard E Bond has no effect on the direction of Vanguard Emerging i.e., Vanguard Emerging and Vanguard Core go up and down completely randomly.
Pair Corralation between Vanguard Emerging and Vanguard Core
Assuming the 90 days horizon Vanguard Emerging Markets is expected to generate 0.92 times more return on investment than Vanguard Core. However, Vanguard Emerging Markets is 1.09 times less risky than Vanguard Core. It trades about 0.12 of its potential returns per unit of risk. Vanguard E Bond is currently generating about 0.06 per unit of risk. If you would invest 1,014 in Vanguard Emerging Markets on August 30, 2024 and sell it today you would earn a total of 9.00 from holding Vanguard Emerging Markets or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Emerging Markets vs. Vanguard E Bond
Performance |
| Timeline |
| Vanguard Emerging Markets |
| Vanguard E Bond |
Vanguard Emerging and Vanguard Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Emerging and Vanguard Core
The main advantage of trading using opposite Vanguard Emerging and Vanguard Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Emerging position performs unexpectedly, Vanguard Core 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 Core will offset losses from the drop in Vanguard Core's long position.| Vanguard Emerging vs. Vanguard E Bond | Vanguard Emerging vs. Vanguard Emerging Markets | Vanguard Emerging vs. Vanguard Global Credit | Vanguard Emerging vs. Vanguard Ultra Short Term Bond |
| Vanguard Core vs. Vanguard Total Bond | Vanguard Core vs. Vanguard Total Bond | Vanguard Core vs. Vanguard Total Bond | Vanguard Core vs. Bond Fund Of |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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