Correlation Between Versatile Bond and Vanguard Emerging
Can any of the company-specific risk be diversified away by investing in both Versatile Bond and Vanguard 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 Versatile Bond and Vanguard Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Versatile Bond Portfolio and Vanguard Emerging Markets, you can compare the effects of market volatilities on Versatile Bond and Vanguard 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 Versatile Bond with a short position of Vanguard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Versatile Bond and Vanguard Emerging.
Diversification Opportunities for Versatile Bond and Vanguard Emerging
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VERSATILE and Vanguard is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Versatile Bond Portfolio and Vanguard Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Emerging Markets and Versatile Bond 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 Versatile Bond Portfolio are associated (or correlated) with Vanguard Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Emerging Markets has no effect on the direction of Versatile Bond i.e., Versatile Bond and Vanguard Emerging go up and down completely randomly.
Pair Corralation between Versatile Bond and Vanguard Emerging
Assuming the 90 days horizon Versatile Bond is expected to generate 1.32 times less return on investment than Vanguard Emerging. But when comparing it to its historical volatility, Versatile Bond Portfolio is 2.78 times less risky than Vanguard Emerging. It trades about 0.51 of its potential returns per unit of risk. Vanguard Emerging Markets is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,324 in Vanguard Emerging Markets on June 4, 2025 and sell it today you would earn a total of 85.00 from holding Vanguard Emerging Markets or generate 3.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Versatile Bond Portfolio vs. Vanguard Emerging Markets
Performance |
| Timeline |
| Versatile Bond Portfolio |
| Vanguard Emerging Markets |
Versatile Bond and Vanguard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Versatile Bond and Vanguard Emerging
The main advantage of trading using opposite Versatile Bond and Vanguard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Versatile Bond position performs unexpectedly, Vanguard 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 Vanguard Emerging will offset losses from the drop in Vanguard Emerging's long position.| Versatile Bond vs. Short Term Treasury Portfolio | Versatile Bond vs. Aggressive Growth Portfolio | Versatile Bond vs. Permanent Portfolio Class | Versatile Bond vs. Thompson Bond Fund |
| Vanguard Emerging vs. Prudential Qma Large Cap | Vanguard Emerging vs. Qs Large Cap | Vanguard Emerging vs. Qs Large Cap | Vanguard Emerging vs. Lord Abbett Affiliated |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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