Correlation Between Vanguard Total and Emerging Europe
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Emerging Europe 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 Emerging Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Stock and Emerging Europe Fund, you can compare the effects of market volatilities on Vanguard Total and Emerging Europe 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 Emerging Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Emerging Europe.
Diversification Opportunities for Vanguard Total and Emerging Europe
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Emerging is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Emerging Europe Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Europe 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 Stock are associated (or correlated) with Emerging Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Europe has no effect on the direction of Vanguard Total i.e., Vanguard Total and Emerging Europe go up and down completely randomly.
Pair Corralation between Vanguard Total and Emerging Europe
Assuming the 90 days horizon Vanguard Total Stock is expected to generate 0.59 times more return on investment than Emerging Europe. However, Vanguard Total Stock is 1.69 times less risky than Emerging Europe. It trades about 0.12 of its potential returns per unit of risk. Emerging Europe Fund is currently generating about 0.04 per unit of risk. If you would invest 10,290 in Vanguard Total Stock on September 2, 2024 and sell it today you would earn a total of 4,295 from holding Vanguard Total Stock or generate 41.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 8.06% |
| Values | Daily Returns |
Vanguard Total Stock vs. Emerging Europe Fund
Performance |
| Timeline |
| Vanguard Total Stock |
| Emerging Europe |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Vanguard Total and Emerging Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Emerging Europe
The main advantage of trading using opposite Vanguard Total and Emerging Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Emerging Europe 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 Emerging Europe will offset losses from the drop in Emerging Europe's long position.| Vanguard Total vs. Aqr Managed Futures | Vanguard Total vs. Lord Abbett Inflation | Vanguard Total vs. Nationwide Inflation Protected Securities | Vanguard Total vs. Oklahoma College Savings |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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