Correlation Between Causeway Emerging and Investment Managers
Can any of the company-specific risk be diversified away by investing in both Causeway Emerging and Investment Managers 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 Investment Managers 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 Investment Managers Series, you can compare the effects of market volatilities on Causeway Emerging and Investment Managers 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 Investment Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Causeway Emerging and Investment Managers.
Diversification Opportunities for Causeway Emerging and Investment Managers
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Causeway and Investment is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Causeway Emerging Markets and Investment Managers Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Managers 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 Investment Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Managers has no effect on the direction of Causeway Emerging i.e., Causeway Emerging and Investment Managers go up and down completely randomly.
Pair Corralation between Causeway Emerging and Investment Managers
Assuming the 90 days horizon Causeway Emerging Markets is expected to under-perform the Investment Managers. In addition to that, Causeway Emerging is 1.39 times more volatile than Investment Managers Series. It trades about -0.18 of its total potential returns per unit of risk. Investment Managers Series is currently generating about 0.09 per unit of volatility. If you would invest 1,495 in Investment Managers Series on August 26, 2024 and sell it today you would earn a total of 19.00 from holding Investment Managers Series or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Causeway Emerging Markets vs. Investment Managers Series
Performance |
| Timeline |
| Causeway Emerging Markets |
| Investment Managers |
Causeway Emerging and Investment Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Causeway Emerging and Investment Managers
The main advantage of trading using opposite Causeway Emerging and Investment Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Causeway Emerging position performs unexpectedly, Investment Managers 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 Investment Managers will offset losses from the drop in Investment Managers' long position.| Causeway Emerging vs. Causeway International Small | Causeway Emerging vs. Causeway Emerging Markets | Causeway Emerging vs. Causeway Global Value | Causeway Emerging vs. Causeway Global Value |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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