Correlation Between Vanguard Explorer and Emerald Growth
Can any of the company-specific risk be diversified away by investing in both Vanguard Explorer and Emerald Growth 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 Explorer and Emerald Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Explorer Fund and Emerald Growth Fund, you can compare the effects of market volatilities on Vanguard Explorer and Emerald Growth 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 Explorer with a short position of Emerald Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Explorer and Emerald Growth.
Diversification Opportunities for Vanguard Explorer and Emerald Growth
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Emerald is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Explorer Fund and Emerald Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Growth and Vanguard Explorer 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 Explorer Fund are associated (or correlated) with Emerald Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Growth has no effect on the direction of Vanguard Explorer i.e., Vanguard Explorer and Emerald Growth go up and down completely randomly.
Pair Corralation between Vanguard Explorer and Emerald Growth
Assuming the 90 days horizon Vanguard Explorer is expected to generate 1.23 times less return on investment than Emerald Growth. But when comparing it to its historical volatility, Vanguard Explorer Fund is 1.33 times less risky than Emerald Growth. It trades about 0.35 of its potential returns per unit of risk. Emerald Growth Fund is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 2,654 in Emerald Growth Fund on September 1, 2024 and sell it today you would earn a total of 315.00 from holding Emerald Growth Fund or generate 11.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard Explorer Fund vs. Emerald Growth Fund
Performance |
| Timeline |
| Vanguard Explorer |
| Emerald Growth |
Vanguard Explorer and Emerald Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Explorer and Emerald Growth
The main advantage of trading using opposite Vanguard Explorer and Emerald Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Explorer position performs unexpectedly, Emerald Growth 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 Emerald Growth will offset losses from the drop in Emerald Growth's long position.| Vanguard Explorer vs. Vanguard International Growth | Vanguard Explorer vs. Vanguard Windsor Ii | Vanguard Explorer vs. Vanguard Primecap Fund | Vanguard Explorer vs. Vanguard Growth Fund |
| Emerald Growth vs. Emerald Banking And | Emerald Growth vs. Emerald Growth Fund | Emerald Growth vs. Emerald Insights Fund | Emerald Growth vs. Emerald Insights 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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