Correlation Between Vanguard Lifestrategy and Investec Emerging
Can any of the company-specific risk be diversified away by investing in both Vanguard Lifestrategy and Investec 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 Lifestrategy and Investec Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Lifestrategy Moderate and Investec Emerging Markets, you can compare the effects of market volatilities on Vanguard Lifestrategy and Investec 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 Lifestrategy with a short position of Investec Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Lifestrategy and Investec Emerging.
Diversification Opportunities for Vanguard Lifestrategy and Investec Emerging
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vanguard and Investec is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Lifestrategy Moderate and Investec Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Emerging Markets and Vanguard Lifestrategy 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 Lifestrategy Moderate are associated (or correlated) with Investec Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Emerging Markets has no effect on the direction of Vanguard Lifestrategy i.e., Vanguard Lifestrategy and Investec Emerging go up and down completely randomly.
Pair Corralation between Vanguard Lifestrategy and Investec Emerging
Assuming the 90 days horizon Vanguard Lifestrategy is expected to generate 2.03 times less return on investment than Investec Emerging. But when comparing it to its historical volatility, Vanguard Lifestrategy Moderate is 1.67 times less risky than Investec Emerging. It trades about 0.07 of its potential returns per unit of risk. Investec Emerging Markets is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 908.00 in Investec Emerging Markets on November 9, 2024 and sell it today you would earn a total of 189.00 from holding Investec Emerging Markets or generate 20.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Lifestrategy Moderate vs. Investec Emerging Markets
Performance |
| Timeline |
| Vanguard Lifestrategy |
| Investec Emerging Markets |
Vanguard Lifestrategy and Investec Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Lifestrategy and Investec Emerging
The main advantage of trading using opposite Vanguard Lifestrategy and Investec Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Lifestrategy position performs unexpectedly, Investec 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 Investec Emerging will offset losses from the drop in Investec Emerging's long position.The idea behind Vanguard Lifestrategy Moderate and Investec Emerging Markets pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Investec Emerging vs. Rational Special Situations | Investec Emerging vs. Ab Global Bond | Investec Emerging vs. Bbh Intermediate Municipal | Investec Emerging vs. Ab Bond Inflation |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Stocks Directory Find actively traded stocks across global markets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |