Correlation Between Vanguard Emerging and Wasatch Emerging
Can any of the company-specific risk be diversified away by investing in both Vanguard Emerging and Wasatch 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 Wasatch 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 Wasatch Emerging Markets, you can compare the effects of market volatilities on Vanguard Emerging and Wasatch 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 Wasatch Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Emerging and Wasatch Emerging.
Diversification Opportunities for Vanguard Emerging and Wasatch Emerging
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and Wasatch is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Emerging Markets and Wasatch Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch 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 Wasatch Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Emerging Markets has no effect on the direction of Vanguard Emerging i.e., Vanguard Emerging and Wasatch Emerging go up and down completely randomly.
Pair Corralation between Vanguard Emerging and Wasatch Emerging
Assuming the 90 days horizon Vanguard Emerging is expected to generate 1.15 times less return on investment than Wasatch Emerging. But when comparing it to its historical volatility, Vanguard Emerging Markets is 1.06 times less risky than Wasatch Emerging. It trades about 0.05 of its potential returns per unit of risk. Wasatch Emerging Markets is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 257.00 in Wasatch Emerging Markets on August 28, 2024 and sell it today you would earn a total of 50.00 from holding Wasatch Emerging Markets or generate 19.46% 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. Wasatch Emerging Markets
Performance |
| Timeline |
| Vanguard Emerging Markets |
| Wasatch Emerging Markets |
Vanguard Emerging and Wasatch Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Emerging and Wasatch Emerging
The main advantage of trading using opposite Vanguard Emerging and Wasatch Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Emerging position performs unexpectedly, Wasatch 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 Wasatch Emerging will offset losses from the drop in Wasatch Emerging's long position.| Vanguard Emerging vs. Quantitative U S | Vanguard Emerging vs. Aqr Large Cap | Vanguard Emerging vs. Nuveen Winslow Large Cap | Vanguard Emerging vs. Touchstone Large Cap |
| Wasatch Emerging vs. Wasatch International Opportunities | Wasatch Emerging vs. Wasatch International Growth | Wasatch Emerging vs. Wasatch Frontier Emerging | Wasatch Emerging vs. Wasatch Micro Cap |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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