Correlation Between California High and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both California High and Ashmore 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 California High and Ashmore Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California High Yield Municipal and Ashmore Emerging Markets, you can compare the effects of market volatilities on California High and Ashmore 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 California High with a short position of Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High and Ashmore Emerging.
Diversification Opportunities for California High and Ashmore Emerging
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between California and Ashmore is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Ashmore Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Emerging Markets and California High 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 California High Yield Municipal are associated (or correlated) with Ashmore Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Emerging Markets has no effect on the direction of California High i.e., California High and Ashmore Emerging go up and down completely randomly.
Pair Corralation between California High and Ashmore Emerging
Assuming the 90 days horizon California High is expected to generate 1.26 times less return on investment than Ashmore Emerging. But when comparing it to its historical volatility, California High Yield Municipal is 4.84 times less risky than Ashmore Emerging. It trades about 0.41 of its potential returns per unit of risk. Ashmore Emerging Markets is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,398 in Ashmore Emerging Markets on September 13, 2024 and sell it today you would earn a total of 22.00 from holding Ashmore Emerging Markets or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
California High Yield Municipa vs. Ashmore Emerging Markets
Performance |
| Timeline |
| California High Yield |
| Ashmore Emerging Markets |
California High and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High and Ashmore Emerging
The main advantage of trading using opposite California High and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High position performs unexpectedly, Ashmore 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 Ashmore Emerging will offset losses from the drop in Ashmore Emerging's long position.| California High vs. Franklin Gold Precious | California High vs. Invesco Gold Special | California High vs. Great West Goldman Sachs | California High vs. Vy Goldman Sachs |
| Ashmore Emerging vs. Ashmore Emerging Markets | Ashmore Emerging vs. Ashmore Emerging Markets | Ashmore Emerging vs. Ashmore Emerging Markets | Ashmore Emerging vs. Ashmore Emerging Markets |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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