Correlation Between Vanguard Emerging and Amana Developing
Can any of the company-specific risk be diversified away by investing in both Vanguard Emerging and Amana Developing 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 Amana Developing 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 Amana Developing World, you can compare the effects of market volatilities on Vanguard Emerging and Amana Developing 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 Amana Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Emerging and Amana Developing.
Diversification Opportunities for Vanguard Emerging and Amana Developing
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Amana is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Emerging Markets and Amana Developing World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amana Developing World 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 Amana Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amana Developing World has no effect on the direction of Vanguard Emerging i.e., Vanguard Emerging and Amana Developing go up and down completely randomly.
Pair Corralation between Vanguard Emerging and Amana Developing
Assuming the 90 days horizon Vanguard Emerging Markets is expected to generate 1.42 times more return on investment than Amana Developing. However, Vanguard Emerging is 1.42 times more volatile than Amana Developing World. It trades about -0.01 of its potential returns per unit of risk. Amana Developing World is currently generating about -0.05 per unit of risk. If you would invest 2,957 in Vanguard Emerging Markets on September 12, 2024 and sell it today you would lose (6.00) from holding Vanguard Emerging Markets or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Emerging Markets vs. Amana Developing World
Performance |
| Timeline |
| Vanguard Emerging Markets |
| Amana Developing World |
Vanguard Emerging and Amana Developing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Emerging and Amana Developing
The main advantage of trading using opposite Vanguard Emerging and Amana Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Emerging position performs unexpectedly, Amana Developing 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 Amana Developing will offset losses from the drop in Amana Developing's long position.| Vanguard Emerging vs. Inverse Government Long | Vanguard Emerging vs. Aig Government Money | Vanguard Emerging vs. Prudential Government Income | Vanguard Emerging vs. Long Term Government Fund |
| Amana Developing vs. American Funds New | Amana Developing vs. SCOR PK | Amana Developing vs. Morningstar Unconstrained Allocation | Amana Developing vs. Via Renewables |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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