Correlation Between Vanguard FTSE and Columbia Emerging
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and Columbia 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 FTSE and Columbia Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard FTSE Emerging and Columbia Emerging Markets, you can compare the effects of market volatilities on Vanguard FTSE and Columbia 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 FTSE with a short position of Columbia Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Columbia Emerging.
Diversification Opportunities for Vanguard FTSE and Columbia Emerging
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Columbia is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Emerging and Columbia Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Emerging Markets and Vanguard FTSE 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 FTSE Emerging are associated (or correlated) with Columbia Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Emerging Markets has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Columbia Emerging go up and down completely randomly.
Pair Corralation between Vanguard FTSE and Columbia Emerging
Considering the 90-day investment horizon Vanguard FTSE Emerging is expected to generate 1.01 times more return on investment than Columbia Emerging. However, Vanguard FTSE is 1.01 times more volatile than Columbia Emerging Markets. It trades about 0.05 of its potential returns per unit of risk. Columbia Emerging Markets is currently generating about 0.03 per unit of risk. If you would invest 4,288 in Vanguard FTSE Emerging on November 2, 2024 and sell it today you would earn a total of 194.00 from holding Vanguard FTSE Emerging or generate 4.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.04% |
| Values | Daily Returns |
Vanguard FTSE Emerging vs. Columbia Emerging Markets
Performance |
| Timeline |
| Vanguard FTSE Emerging |
| Columbia Emerging Markets |
Vanguard FTSE and Columbia Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and Columbia Emerging
The main advantage of trading using opposite Vanguard FTSE and Columbia Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, Columbia 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 Columbia Emerging will offset losses from the drop in Columbia Emerging's long position.| Vanguard FTSE vs. Vanguard FTSE Developed | Vanguard FTSE vs. Vanguard Real Estate | Vanguard FTSE vs. Vanguard Small Cap Index | Vanguard FTSE vs. Vanguard Total Stock |
| Columbia Emerging vs. SPDR SP Emerging | Columbia Emerging vs. WisdomTree Emerging Markets | Columbia Emerging vs. WisdomTree Emerging Markets | Columbia Emerging vs. SPDR SP Emerging |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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