Correlation Between Vanguard Emerging and Pnc Emerging

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

Diversification Opportunities for Vanguard Emerging and Pnc Emerging

0.73

Correlation Coefficient

Vanguard Emerging  Pnc Emerging

Poor diversification

The 3 months correlation between Vanguard and Pnc is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Emerging Markets and Pnc Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pnc Emerging Markets 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 Pnc Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pnc Emerging Markets has no effect on the direction of Vanguard Emerging i.e., Vanguard Emerging and Pnc Emerging go up and down completely randomly.

Pair Corralation between Vanguard Emerging and Pnc Emerging

Assuming the 90 days horizon Vanguard Emerging is expected to generate 1.04 times less return on investment than Pnc Emerging. But when comparing it to its historical volatility, Vanguard Emerging Markets is 1.24 times less risky than Pnc Emerging. It trades about 0.05 of its potential returns per unit of risk. Pnc Emerging Markets is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,344  in Pnc Emerging Markets on October 4, 2024 and sell it today you would earn a total of  170.00  from holding Pnc Emerging Markets or generate 12.65% return on investment over 90 days.

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

Vanguard Emerging Markets  vs.  Pnc Emerging Markets

Vanguard Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pnc Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Vanguard Emerging and Pnc Emerging

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

The idea behind Vanguard Emerging Markets and Pnc Emerging Markets 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.