Correlation Between ADRE and Vanguard FTSE
Can any of the company-specific risk be diversified away by investing in both ADRE and Vanguard FTSE 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 ADRE and Vanguard FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADRE and Vanguard FTSE Emerging, you can compare the effects of market volatilities on ADRE and Vanguard FTSE 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 ADRE with a short position of Vanguard FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADRE and Vanguard FTSE.
Diversification Opportunities for ADRE and Vanguard FTSE
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ADRE and Vanguard is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding ADRE and Vanguard FTSE Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Emerging and ADRE 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 ADRE are associated (or correlated) with Vanguard FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Emerging has no effect on the direction of ADRE i.e., ADRE and Vanguard FTSE go up and down completely randomly.
Pair Corralation between ADRE and Vanguard FTSE
If you would invest 3,820 in ADRE on January 25, 2024 and sell it today you would earn a total of 0.00 from holding ADRE or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
ADRE vs. Vanguard FTSE Emerging
Performance |
| Timeline |
| ADRE |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Vanguard FTSE Emerging |
ADRE and Vanguard FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADRE and Vanguard FTSE
The main advantage of trading using opposite ADRE and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADRE position performs unexpectedly, Vanguard FTSE 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 FTSE will offset losses from the drop in Vanguard FTSE's long position.The idea behind ADRE and Vanguard FTSE Emerging 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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