Correlation Between Vanguard Emerging and Vanguard Industrials
Can any of the company-specific risk be diversified away by investing in both Vanguard Emerging and Vanguard Industrials 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 Industrials 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 Industrials Index, you can compare the effects of market volatilities on Vanguard Emerging and Vanguard Industrials 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 Industrials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Emerging and Vanguard Industrials.
Diversification Opportunities for Vanguard Emerging and Vanguard Industrials
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and Vanguard is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Emerging Markets and Vanguard Industrials Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Industrials 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 Industrials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Industrials has no effect on the direction of Vanguard Emerging i.e., Vanguard Emerging and Vanguard Industrials go up and down completely randomly.
Pair Corralation between Vanguard Emerging and Vanguard Industrials
Assuming the 90 days horizon Vanguard Emerging Markets is expected to under-perform the Vanguard Industrials. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard Emerging Markets is 1.51 times less risky than Vanguard Industrials. The mutual fund trades about -0.19 of its potential returns per unit of risk. The Vanguard Industrials Index is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 13,459 in Vanguard Industrials Index on August 24, 2024 and sell it today you would earn a total of 372.00 from holding Vanguard Industrials Index or generate 2.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Emerging Markets vs. Vanguard Industrials Index
Performance |
| Timeline |
| Vanguard Emerging Markets |
| Vanguard Industrials |
Vanguard Emerging and Vanguard Industrials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Emerging and Vanguard Industrials
The main advantage of trading using opposite Vanguard Emerging and Vanguard Industrials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Emerging position performs unexpectedly, Vanguard Industrials 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 Industrials will offset losses from the drop in Vanguard Industrials' 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 |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |