Correlation Between Emerging Markets and Value Fund
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Value Fund 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 Emerging Markets and Value Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Fund and Value Fund A, you can compare the effects of market volatilities on Emerging Markets and Value Fund 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 Emerging Markets with a short position of Value Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Value Fund.
Diversification Opportunities for Emerging Markets and Value Fund
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Emerging and Value is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Fund and Value Fund A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Fund A and Emerging Markets 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 Emerging Markets Fund are associated (or correlated) with Value Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Fund A has no effect on the direction of Emerging Markets i.e., Emerging Markets and Value Fund go up and down completely randomly.
Pair Corralation between Emerging Markets and Value Fund
Assuming the 90 days horizon Emerging Markets Fund is expected to generate 1.06 times more return on investment than Value Fund. However, Emerging Markets is 1.06 times more volatile than Value Fund A. It trades about 0.04 of its potential returns per unit of risk. Value Fund A is currently generating about 0.02 per unit of risk. If you would invest 975.00 in Emerging Markets Fund on August 30, 2024 and sell it today you would earn a total of 175.00 from holding Emerging Markets Fund or generate 17.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerging Markets Fund vs. Value Fund A
Performance |
| Timeline |
| Emerging Markets |
| Value Fund A |
Emerging Markets and Value Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Value Fund
The main advantage of trading using opposite Emerging Markets and Value Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Value Fund 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 Value Fund will offset losses from the drop in Value Fund's long position.| Emerging Markets vs. International Growth Fund | Emerging Markets vs. Value Fund I | Emerging Markets vs. Mfs International New | Emerging Markets vs. Heritage Fund I |
| Value Fund vs. Dodge Cox Stock | Value Fund vs. American Mutual Fund | Value Fund vs. American Funds American | Value Fund vs. American Funds American |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |