Correlation Between Strategic Allocation: and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Strategic Allocation: and Emerging Markets 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 Strategic Allocation: and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Allocation Aggressive and The Emerging Markets, you can compare the effects of market volatilities on Strategic Allocation: and Emerging Markets 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 Strategic Allocation: with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Allocation: and Emerging Markets.
Diversification Opportunities for Strategic Allocation: and Emerging Markets
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Strategic and Emerging is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Allocation Aggressiv and The Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and Strategic Allocation: 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 Strategic Allocation Aggressive are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Strategic Allocation: i.e., Strategic Allocation: and Emerging Markets go up and down completely randomly.
Pair Corralation between Strategic Allocation: and Emerging Markets
Assuming the 90 days horizon Strategic Allocation: is expected to generate 2.54 times less return on investment than Emerging Markets. But when comparing it to its historical volatility, Strategic Allocation Aggressive is 1.75 times less risky than Emerging Markets. It trades about 0.08 of its potential returns per unit of risk. The Emerging Markets is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,920 in The Emerging Markets on November 30, 2024 and sell it today you would earn a total of 96.00 from holding The Emerging Markets or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.56% |
| Values | Daily Returns |
Strategic Allocation Aggressiv vs. The Emerging Markets
Performance |
| Timeline |
| Strategic Allocation: |
| Emerging Markets |
Strategic Allocation: and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Allocation: and Emerging Markets
The main advantage of trading using opposite Strategic Allocation: and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Allocation: position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Strategic Allocation: vs. Short Duration Inflation | Strategic Allocation: vs. Inflation Adjusted Bond Fund | Strategic Allocation: vs. Simt Multi Asset Inflation | Strategic Allocation: vs. Ab Bond Inflation |
| Emerging Markets vs. Versatile Bond Portfolio | Emerging Markets vs. Shelton Emerging Markets | Emerging Markets vs. Alternative Asset Allocation | Emerging Markets vs. Arrow Managed Futures |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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