Correlation Between Vanguard Emerging and Cullen Emerging
Can any of the company-specific risk be diversified away by investing in both Vanguard Emerging and Cullen 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 Cullen 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 Cullen Emerging Markets, you can compare the effects of market volatilities on Vanguard Emerging and Cullen 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 Cullen Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Emerging and Cullen Emerging.
Diversification Opportunities for Vanguard Emerging and Cullen Emerging
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Cullen is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Emerging Markets and Cullen Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen 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 Cullen Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen Emerging Markets has no effect on the direction of Vanguard Emerging i.e., Vanguard Emerging and Cullen Emerging go up and down completely randomly.
Pair Corralation between Vanguard Emerging and Cullen Emerging
Assuming the 90 days horizon Vanguard Emerging Markets is expected to under-perform the Cullen Emerging. In addition to that, Vanguard Emerging is 1.42 times more volatile than Cullen Emerging Markets. It trades about -0.18 of its total potential returns per unit of risk. Cullen Emerging Markets is currently generating about -0.14 per unit of volatility. If you would invest 1,294 in Cullen Emerging Markets on August 26, 2024 and sell it today you would lose (24.00) from holding Cullen Emerging Markets or give up 1.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Emerging Markets vs. Cullen Emerging Markets
Performance |
| Timeline |
| Vanguard Emerging Markets |
| Cullen Emerging Markets |
Vanguard Emerging and Cullen Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Emerging and Cullen Emerging
The main advantage of trading using opposite Vanguard Emerging and Cullen Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Emerging position performs unexpectedly, Cullen 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 Cullen Emerging will offset losses from the drop in Cullen 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 |
| Cullen Emerging vs. Hartford Moderate Allocation | Cullen Emerging vs. Fidelity Managed Retirement | Cullen Emerging vs. Pro Blend Moderate Term | Cullen Emerging vs. Blackrock Moderate Prepared |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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