Correlation Between Vanguard EUR and Vanguard USD
Can any of the company-specific risk be diversified away by investing in both Vanguard EUR and Vanguard USD 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 EUR and Vanguard USD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard EUR Eurozone and Vanguard USD Emerging, you can compare the effects of market volatilities on Vanguard EUR and Vanguard USD 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 EUR with a short position of Vanguard USD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard EUR and Vanguard USD.
Diversification Opportunities for Vanguard EUR and Vanguard USD
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Vanguard is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard EUR Eurozone and Vanguard USD Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard USD Emerging and Vanguard EUR 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 EUR Eurozone are associated (or correlated) with Vanguard USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard USD Emerging has no effect on the direction of Vanguard EUR i.e., Vanguard EUR and Vanguard USD go up and down completely randomly.
Pair Corralation between Vanguard EUR and Vanguard USD
Assuming the 90 days trading horizon Vanguard EUR is expected to generate 3.56 times less return on investment than Vanguard USD. But when comparing it to its historical volatility, Vanguard EUR Eurozone is 1.17 times less risky than Vanguard USD. It trades about 0.11 of its potential returns per unit of risk. Vanguard USD Emerging is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 4,879 in Vanguard USD Emerging on August 30, 2024 and sell it today you would earn a total of 150.00 from holding Vanguard USD Emerging or generate 3.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard EUR Eurozone vs. Vanguard USD Emerging
Performance |
| Timeline |
| Vanguard EUR Eurozone |
| Vanguard USD Emerging |
Vanguard EUR and Vanguard USD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard EUR and Vanguard USD
The main advantage of trading using opposite Vanguard EUR and Vanguard USD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard EUR position performs unexpectedly, Vanguard USD 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 USD will offset losses from the drop in Vanguard USD's long position.| Vanguard EUR vs. Vanguard FTSE Emerging | Vanguard EUR vs. Vanguard USD Emerging | Vanguard EUR vs. Vanguard FTSE Developed | Vanguard EUR vs. Vanguard FTSE Japan |
| Vanguard USD vs. Vanguard FTSE Emerging | Vanguard USD vs. Vanguard FTSE Developed | Vanguard USD vs. Vanguard FTSE Japan | Vanguard USD vs. Vanguard EUR Eurozone |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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