Correlation Between Vanguard Total and Emerging Markets

Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Emerging Markets 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 Markets 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 Emerging Markets Leaders, you can compare the effects of market volatilities on Vanguard Total and Emerging Markets 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 Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Emerging Markets.

Diversification Opportunities for Vanguard Total and Emerging Markets

-0.63

Correlation Coefficient

Vanguard Total  Emerging Markets

Excellent diversification

The 3 months correlation between Vanguard and Emerging is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total International and Emerging Markets Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Leaders 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 Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Leaders has no effect on the direction of Vanguard Total i.e., Vanguard Total and Emerging Markets go up and down completely randomly.

Pair Corralation between Vanguard Total and Emerging Markets

If you would invest  2,240  in Emerging Markets Leaders on September 23, 2024 and sell it today you would earn a total of  0.00  from holding Emerging Markets Leaders or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.54%
Values	Daily Returns

Vanguard Total International  vs.  Emerging Markets Leaders

Vanguard Total Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Total International has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Emerging Markets Leaders

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerging Markets Leaders has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Emerging Markets is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Total and Emerging Markets

The main advantage of trading using opposite Vanguard Total and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Emerging Markets 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 Markets will offset losses from the drop in Emerging Markets' long position.

The idea behind Vanguard Total International and Emerging Markets Leaders 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.

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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.