Correlation Between Vanguard Emerging and WisdomTree International
Can any of the company-specific risk be diversified away by investing in both Vanguard Emerging and WisdomTree International 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 Emerging and WisdomTree International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Emerging Markets and WisdomTree International High, you can compare the effects of market volatilities on Vanguard Emerging and WisdomTree International 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 Emerging with a short position of WisdomTree International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Emerging and WisdomTree International.
Diversification Opportunities for Vanguard Emerging and WisdomTree International
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and WisdomTree is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Emerging Markets and WisdomTree International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International and Vanguard Emerging 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 Emerging Markets are associated (or correlated) with WisdomTree International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree International has no effect on the direction of Vanguard Emerging i.e., Vanguard Emerging and WisdomTree International go up and down completely randomly.
Pair Corralation between Vanguard Emerging and WisdomTree International
Given the investment horizon of 90 days Vanguard Emerging Markets is expected to generate 0.44 times more return on investment than WisdomTree International. However, Vanguard Emerging Markets is 2.26 times less risky than WisdomTree International. It trades about 0.12 of its potential returns per unit of risk. WisdomTree International High is currently generating about -0.01 per unit of risk. If you would invest 6,168 in Vanguard Emerging Markets on September 1, 2024 and sell it today you would earn a total of 357.00 from holding Vanguard Emerging Markets or generate 5.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Vanguard Emerging Markets vs. WisdomTree International High
Performance |
| Timeline |
| Vanguard Emerging Markets |
| WisdomTree International |
Vanguard Emerging and WisdomTree International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Emerging and WisdomTree International
The main advantage of trading using opposite Vanguard Emerging and WisdomTree International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Emerging position performs unexpectedly, WisdomTree International 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 WisdomTree International will offset losses from the drop in WisdomTree International's long position.| Vanguard Emerging vs. iShares JP Morgan | Vanguard Emerging vs. SPDR Bloomberg Barclays | Vanguard Emerging vs. SPDR DoubleLine Emerging | Vanguard Emerging vs. JPMorgan USD 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |