Correlation Between Vanguard Developed and Investec Emerging
Can any of the company-specific risk be diversified away by investing in both Vanguard Developed and Investec 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 Developed and Investec Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Developed Markets and Investec Emerging Markets, you can compare the effects of market volatilities on Vanguard Developed and Investec 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 Developed with a short position of Investec Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Developed and Investec Emerging.
Diversification Opportunities for Vanguard Developed and Investec Emerging
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Investec is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Developed Markets and Investec Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Emerging Markets and Vanguard Developed 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 Developed Markets are associated (or correlated) with Investec Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Emerging Markets has no effect on the direction of Vanguard Developed i.e., Vanguard Developed and Investec Emerging go up and down completely randomly.
Pair Corralation between Vanguard Developed and Investec Emerging
Assuming the 90 days horizon Vanguard Developed is expected to generate 1.44 times less return on investment than Investec Emerging. But when comparing it to its historical volatility, Vanguard Developed Markets is 1.02 times less risky than Investec Emerging. It trades about 0.25 of its potential returns per unit of risk. Investec Emerging Markets is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,093 in Investec Emerging Markets on April 23, 2025 and sell it today you would earn a total of 171.00 from holding Investec Emerging Markets or generate 15.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Developed Markets vs. Investec Emerging Markets
Performance |
| Timeline |
| Vanguard Developed |
| Investec Emerging Markets |
Vanguard Developed and Investec Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Developed and Investec Emerging
The main advantage of trading using opposite Vanguard Developed and Investec Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Developed position performs unexpectedly, Investec 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 Investec Emerging will offset losses from the drop in Investec Emerging's long position.| Vanguard Developed vs. Tax Managed Mid Small | Vanguard Developed vs. Volumetric Fund Volumetric | Vanguard Developed vs. Nasdaq 100 Index Fund | Vanguard Developed vs. Balanced Fund Retail |
| Investec Emerging vs. Loomis Sayles Inflation | Investec Emerging vs. The Hartford Inflation | Investec Emerging vs. Tiaa Cref Inflation Link | Investec Emerging vs. Ab Bond Inflation |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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