Correlation Between Ep Emerging and Vaughan Nelson

Can any of the company-specific risk be diversified away by investing in both Ep Emerging and Vaughan Nelson 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 Ep Emerging and Vaughan Nelson into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ep Emerging Markets and Vaughan Nelson Select, you can compare the effects of market volatilities on Ep Emerging and Vaughan Nelson 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 Ep Emerging with a short position of Vaughan Nelson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ep Emerging and Vaughan Nelson.

Diversification Opportunities for Ep Emerging and Vaughan Nelson

0.18

Correlation Coefficient

Ep Emerging  Vaughan Nelson

Average diversification

The 3 months correlation between EPEIX and Vaughan is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ep Emerging Markets and Vaughan Nelson Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaughan Nelson Select and Ep 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 Ep Emerging Markets are associated (or correlated) with Vaughan Nelson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaughan Nelson Select has no effect on the direction of Ep Emerging i.e., Ep Emerging and Vaughan Nelson go up and down completely randomly.

Pair Corralation between Ep Emerging and Vaughan Nelson

Assuming the 90 days horizon Ep Emerging is expected to generate 2.04 times less return on investment than Vaughan Nelson. But when comparing it to its historical volatility, Ep Emerging Markets is 1.18 times less risky than Vaughan Nelson. It trades about 0.05 of its potential returns per unit of risk. Vaughan Nelson Select is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,924  in Vaughan Nelson Select on September 4, 2024 and sell it today you would earn a total of  365.00  from holding Vaughan Nelson Select or generate 18.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ep Emerging Markets  vs.  Vaughan Nelson Select

Ep Emerging Markets

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ep Emerging Markets are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Ep Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vaughan Nelson Select

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vaughan Nelson Select are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vaughan Nelson may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ep Emerging and Vaughan Nelson

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

The idea behind Ep Emerging Markets and Vaughan Nelson Select 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.