Correlation Between Vanguard Market and Vanguard Emerging
Can any of the company-specific risk be diversified away by investing in both Vanguard Market and Vanguard 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 Market and Vanguard Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Market Neutral and Vanguard Emerging Markets, you can compare the effects of market volatilities on Vanguard Market and Vanguard 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 Market with a short position of Vanguard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Market and Vanguard Emerging.
Diversification Opportunities for Vanguard Market and Vanguard Emerging
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vanguard and Vanguard is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Market Neutral and Vanguard Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Emerging Markets and Vanguard Market 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 Market Neutral are associated (or correlated) with Vanguard Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Emerging Markets has no effect on the direction of Vanguard Market i.e., Vanguard Market and Vanguard Emerging go up and down completely randomly.
Pair Corralation between Vanguard Market and Vanguard Emerging
Assuming the 90 days horizon Vanguard Market is expected to generate 4.73 times less return on investment than Vanguard Emerging. But when comparing it to its historical volatility, Vanguard Market Neutral is 2.48 times less risky than Vanguard Emerging. It trades about 0.03 of its potential returns per unit of risk. Vanguard Emerging Markets is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,999 in Vanguard Emerging Markets on August 29, 2024 and sell it today you would earn a total of 241.00 from holding Vanguard Emerging Markets or generate 12.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Market Neutral vs. Vanguard Emerging Markets
Performance |
| Timeline |
| Vanguard Market Neutral |
| Vanguard Emerging Markets |
Vanguard Market and Vanguard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Market and Vanguard Emerging
The main advantage of trading using opposite Vanguard Market and Vanguard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Market position performs unexpectedly, Vanguard 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 Vanguard Emerging will offset losses from the drop in Vanguard Emerging's long position.| Vanguard Market vs. HUMANA INC | Vanguard Market vs. Aquagold International | Vanguard Market vs. Barloworld Ltd ADR | Vanguard Market vs. Morningstar Unconstrained Allocation |
| Vanguard Emerging vs. Vanguard Emerging Markets | Vanguard Emerging vs. Vanguard Emerging Markets | Vanguard Emerging vs. HUMANA INC | Vanguard Emerging vs. Aquagold International |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |