Correlation Between Cm Modity and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Cm Modity and Emerging Markets 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 Cm Modity and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cm Modity Index and Emerging Markets Fund, you can compare the effects of market volatilities on Cm Modity and Emerging Markets 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 Cm Modity with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cm Modity and Emerging Markets.
Diversification Opportunities for Cm Modity and Emerging Markets
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CMCAX and Emerging is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cm Modity Index and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and Cm Modity 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 Cm Modity Index are associated (or correlated) with Emerging Markets. 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 Cm Modity i.e., Cm Modity and Emerging Markets go up and down completely randomly.
Pair Corralation between Cm Modity and Emerging Markets
Assuming the 90 days horizon Cm Modity Index is expected to generate 0.81 times more return on investment than Emerging Markets. However, Cm Modity Index is 1.24 times less risky than Emerging Markets. It trades about -0.02 of its potential returns per unit of risk. Emerging Markets Fund is currently generating about -0.03 per unit of risk. If you would invest 6,875 in Cm Modity Index on September 3, 2024 and sell it today you would lose (157.00) from holding Cm Modity Index or give up 2.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cm Modity Index vs. Emerging Markets Fund
Performance |
| Timeline |
| Cm Modity Index |
| Emerging Markets |
Cm Modity and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cm Modity and Emerging Markets
The main advantage of trading using opposite Cm Modity and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cm Modity position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Cm Modity vs. Global Hard Assets | Cm Modity vs. Pimco Moditiesplus Strategy | Cm Modity vs. Aqr Risk Balanced Modities | Cm Modity vs. Parametric Modity Strategy |
| Emerging Markets vs. Small Pany Growth | Emerging Markets vs. Tfa Alphagen Growth | Emerging Markets vs. Qs Moderate Growth | Emerging Markets vs. Pace Smallmedium Growth |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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