Correlation Between WCM Focused and Vanguard Emerging

By analyzing existing cross correlation between WCM Focused Emerging and Vanguard Emerging Markets, you can compare the effects of market volatilities on WCM Focused 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 WCM Focused with a short position of Vanguard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of WCM Focused and Vanguard Emerging.
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Can any of the company-specific risk be diversified away by investing in both WCM Focused 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 WCM Focused and Vanguard Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for WCM Focused and Vanguard Emerging

0.0
  Correlation Coefficient
WCM Focused Emerging
Vanguard Emerging Markets

Pay attention - limited upside

The 3 months correlation between WFEMX and Vanguard is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WCM Focused Emerging 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 WCM Focused 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 WCM Focused Emerging 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 WCM Focused i.e., WCM Focused and Vanguard Emerging go up and down completely randomly.

Pair Corralation between WCM Focused and Vanguard Emerging

If you would invest  8,843  in Vanguard Emerging Markets on October 29, 2021 and sell it today you would earn a total of  1,449  from holding Vanguard Emerging Markets or generate 16.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

WCM Focused Emerging  vs.  Vanguard Emerging Markets

 Performance (%) 
      Timeline 
WCM Focused Emerging 
WFEMX Performance
0 of 100
Over the last 90 days WCM Focused Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, WCM Focused is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Vanguard Emerging Markets 
Vanguard Performance
0 of 100
Over the last 90 days Vanguard Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Vanguard Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

WCM Focused and Vanguard Emerging Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with WCM Focused and Vanguard Emerging

The main advantage of trading using opposite WCM Focused and Vanguard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WCM Focused 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.

WCM Focused Emerging

Pair trading matchups for WCM Focused

Vmware vs. WCM Focused
Citigroup vs. WCM Focused
Ford vs. WCM Focused
Du Pont vs. WCM Focused
Dividend Appreciation vs. WCM Focused
Visa vs. WCM Focused
Microsoft Corp vs. WCM Focused
Salesforce vs. WCM Focused
USA Quality vs. WCM Focused
Sentinelone Inc vs. WCM Focused
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against WCM Focused as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. WCM Focused's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, WCM Focused's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to WCM Focused Emerging.
The idea behind WCM Focused Emerging and Vanguard 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.
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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