Correlation Between Vanguard Emerging and New World

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Vanguard Emerging and New World 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 New World 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 New World Fund, you can compare the effects of market volatilities on Vanguard Emerging and New World 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 New World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Emerging and New World.

Diversification Opportunities for Vanguard Emerging and New World

VanguardNewDiversified AwayVanguardNewDiversified Away100%
0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Vanguard and New is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Emerging Markets and New World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World Fund 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 New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Fund has no effect on the direction of Vanguard Emerging i.e., Vanguard Emerging and New World go up and down completely randomly.

Pair Corralation between Vanguard Emerging and New World

Assuming the 90 days horizon Vanguard Emerging Markets is expected to generate 1.4 times more return on investment than New World. However, Vanguard Emerging is 1.4 times more volatile than New World Fund. It trades about 0.08 of its potential returns per unit of risk. New World Fund is currently generating about 0.03 per unit of risk. If you would invest  9,363  in Vanguard Emerging Markets on September 15, 2024 and sell it today you would earn a total of  417.00  from holding Vanguard Emerging Markets or generate 4.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Vanguard Emerging Markets  vs.  New World Fund

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -20246810
JavaScript chart by amCharts 3.21.15VEMRX NFFFX
       Timeline  
Vanguard Emerging Markets 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Emerging Markets are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec9596979899100101102103
New World Fund 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in New World Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, New World is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec80818283848586

Vanguard Emerging and New World Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.91-2.18-1.45-0.720.01270.751.512.283.04 0.20.40.60.8
JavaScript chart by amCharts 3.21.15VEMRX NFFFX
       Returns  

Pair Trading with Vanguard Emerging and New World

The main advantage of trading using opposite Vanguard Emerging and New World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Emerging position performs unexpectedly, New World 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 New World will offset losses from the drop in New World's long position.
The idea behind Vanguard Emerging Markets and New World Fund 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.
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

Other Complementary Tools

Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
ETF Categories
List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments