Correlation Between Us Large and Vanguard Emerging

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

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

Diversification Opportunities for Us Large and Vanguard Emerging

0.88

Correlation Coefficient

Us Large  Vanguard Emerging

Very poor diversification

The 3 months correlation between DFUSX and Vanguard is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Us Large Pany 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 Us Large 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 Us Large Pany 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 Us Large i.e., Us Large and Vanguard Emerging go up and down completely randomly.

Pair Corralation between Us Large and Vanguard Emerging

Assuming the 90 days horizon Us Large is expected to generate 1.14 times less return on investment than Vanguard Emerging. In addition to that, Us Large is 1.04 times more volatile than Vanguard Emerging Markets. It trades about 0.18 of its total potential returns per unit of risk. Vanguard Emerging Markets is currently generating about 0.22 per unit of volatility. If you would invest  3,122  in Vanguard Emerging Markets on May 28, 2025 and sell it today you would earn a total of  161.00  from holding Vanguard Emerging Markets or generate 5.16% return on investment over 90 days.

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

Us Large Pany  vs.  Vanguard Emerging Markets

Us Large Pany

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Us Large Pany are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Us Large may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Vanguard Emerging Markets

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Emerging Markets are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Vanguard Emerging may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Us Large and Vanguard Emerging

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

The idea behind Us Large Pany 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.