Correlation Between Vanguard Emerging and American Funds
Can any of the company-specific risk be diversified away by investing in both Vanguard Emerging and American Funds 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 American Funds 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 American Funds New, you can compare the effects of market volatilities on Vanguard Emerging and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Emerging and American Funds.
Diversification Opportunities for Vanguard Emerging and American Funds
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and American is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Emerging Markets and American Funds New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds New 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds New has no effect on the direction of Vanguard Emerging i.e., Vanguard Emerging and American Funds go up and down completely randomly.
Pair Corralation between Vanguard Emerging and American Funds
Assuming the 90 days horizon Vanguard Emerging Markets is expected to generate 1.04 times more return on investment than American Funds. However, Vanguard Emerging is 1.04 times more volatile than American Funds New. It trades about 0.08 of its potential returns per unit of risk. American Funds New is currently generating about 0.07 per unit of risk. If you would invest 2,495 in Vanguard Emerging Markets on August 24, 2024 and sell it today you would earn a total of 380.00 from holding Vanguard Emerging Markets or generate 15.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Vanguard Emerging Markets vs. American Funds New
Performance |
| Timeline |
| Vanguard Emerging Markets |
| American Funds New |
Vanguard Emerging and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Emerging and American Funds
The main advantage of trading using opposite Vanguard Emerging and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Emerging position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Vanguard Emerging vs. Dreyfus Technology Growth | Vanguard Emerging vs. Vanguard Information Technology | Vanguard Emerging vs. Icon Information Technology | Vanguard Emerging vs. Mfs Technology Fund |
| American Funds vs. Balanced Fund Investor | American Funds vs. Rbc Microcap Value | American Funds vs. Ab Value Fund | American Funds vs. T Rowe Price |
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 CEOs Directory module to screen CEOs from public companies around the world.
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