Correlation Between High-yield Fund and The Emerging
Can any of the company-specific risk be diversified away by investing in both High-yield Fund and The 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 High-yield Fund and The Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Fund C and The Emerging Markets, you can compare the effects of market volatilities on High-yield Fund and The 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 High-yield Fund with a short position of The Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Fund and The Emerging.
Diversification Opportunities for High-yield Fund and The Emerging
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between High-yield and The is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Fund C and The Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and High-yield Fund 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 High Yield Fund C are associated (or correlated) with The Emerging. 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 High-yield Fund i.e., High-yield Fund and The Emerging go up and down completely randomly.
Pair Corralation between High-yield Fund and The Emerging
Assuming the 90 days horizon High-yield Fund is expected to generate 1.62 times less return on investment than The Emerging. But when comparing it to its historical volatility, High Yield Fund C is 6.22 times less risky than The Emerging. It trades about 0.1 of its potential returns per unit of risk. The Emerging Markets is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,843 in The Emerging Markets on September 3, 2024 and sell it today you would earn a total of 24.00 from holding The Emerging Markets or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Fund C vs. The Emerging Markets
Performance |
| Timeline |
| High Yield Fund |
| Emerging Markets |
High-yield Fund and The Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Fund and The Emerging
The main advantage of trading using opposite High-yield Fund and The Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Fund position performs unexpectedly, The 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 The Emerging will offset losses from the drop in The Emerging's long position.| High-yield Fund vs. The Emerging Markets | High-yield Fund vs. Barings Emerging Markets | High-yield Fund vs. Shelton Emerging Markets | High-yield Fund vs. Dodge Cox Emerging |
| The Emerging vs. Vanguard Total Stock | The Emerging vs. Vanguard 500 Index | The Emerging vs. Vanguard Total Stock | The Emerging vs. Vanguard Total Stock |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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