Correlation Between Causeway Emerging and Causeway Global
Can any of the company-specific risk be diversified away by investing in both Causeway Emerging and Causeway Global 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 Causeway Emerging and Causeway Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Causeway Emerging Markets and Causeway Global Value, you can compare the effects of market volatilities on Causeway Emerging and Causeway Global 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 Causeway Emerging with a short position of Causeway Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Causeway Emerging and Causeway Global.
Diversification Opportunities for Causeway Emerging and Causeway Global
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Causeway and Causeway is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Causeway Emerging Markets and Causeway Global Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway Global Value and Causeway Emerging 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 Causeway Emerging Markets are associated (or correlated) with Causeway Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway Global Value has no effect on the direction of Causeway Emerging i.e., Causeway Emerging and Causeway Global go up and down completely randomly.
Pair Corralation between Causeway Emerging and Causeway Global
Assuming the 90 days horizon Causeway Emerging is expected to generate 1.24 times less return on investment than Causeway Global. In addition to that, Causeway Emerging is 1.08 times more volatile than Causeway Global Value. It trades about 0.07 of its total potential returns per unit of risk. Causeway Global Value is currently generating about 0.09 per unit of volatility. If you would invest 1,081 in Causeway Global Value on August 30, 2024 and sell it today you would earn a total of 466.00 from holding Causeway Global Value or generate 43.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Causeway Emerging Markets vs. Causeway Global Value
Performance |
| Timeline |
| Causeway Emerging Markets |
| Causeway Global Value |
Causeway Emerging and Causeway Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Causeway Emerging and Causeway Global
The main advantage of trading using opposite Causeway Emerging and Causeway Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Causeway Emerging position performs unexpectedly, Causeway Global 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 Causeway Global will offset losses from the drop in Causeway Global's long position.| Causeway Emerging vs. Vanguard Emerging Markets | Causeway Emerging vs. Vanguard Emerging Markets | Causeway Emerging vs. HUMANA INC | Causeway Emerging vs. Aquagold International |
| Causeway Global vs. Gold Portfolio Fidelity | Causeway Global vs. Sprott Gold Equity | Causeway Global vs. Franklin Gold Precious | Causeway Global vs. Goldman Sachs Centrated |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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