Correlation Between Vanguard Total and Cullen Emerging
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Cullen 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 Total and Cullen Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total International and Cullen Emerging Markets, you can compare the effects of market volatilities on Vanguard Total and Cullen 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 Total with a short position of Cullen Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Cullen Emerging.
Diversification Opportunities for Vanguard Total and Cullen Emerging
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Cullen is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total International and Cullen Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen Emerging Markets and Vanguard Total 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 Total International are associated (or correlated) with Cullen Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen Emerging Markets has no effect on the direction of Vanguard Total i.e., Vanguard Total and Cullen Emerging go up and down completely randomly.
Pair Corralation between Vanguard Total and Cullen Emerging
Assuming the 90 days horizon Vanguard Total is expected to generate 1.41 times less return on investment than Cullen Emerging. But when comparing it to its historical volatility, Vanguard Total International is 1.0 times less risky than Cullen Emerging. It trades about 0.05 of its potential returns per unit of risk. Cullen Emerging Markets is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,028 in Cullen Emerging Markets on September 2, 2024 and sell it today you would earn a total of 219.00 from holding Cullen Emerging Markets or generate 21.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total International vs. Cullen Emerging Markets
Performance |
| Timeline |
| Vanguard Total Inter |
| Cullen Emerging Markets |
Vanguard Total and Cullen Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Cullen Emerging
The main advantage of trading using opposite Vanguard Total and Cullen Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Cullen 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 Cullen Emerging will offset losses from the drop in Cullen Emerging's long position.| Vanguard Total vs. Vanguard Total Bond | Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Small Cap Index |
| Cullen Emerging vs. Johcm Emerging Markets | Cullen Emerging vs. Wasatch Emerging Markets | Cullen Emerging vs. Virtus Emerging Markets | Cullen Emerging vs. Artisan Developing World |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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