Correlation Between Emerging Markets and Us Core
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Us Core 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 Us Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Small and Us E Equity, you can compare the effects of market volatilities on Emerging Markets and Us Core 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 Us Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Us Core.
Diversification Opportunities for Emerging Markets and Us Core
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Emerging and DFQTX is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Small and Us E Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us E Equity 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 Small are associated (or correlated) with Us Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us E Equity has no effect on the direction of Emerging Markets i.e., Emerging Markets and Us Core go up and down completely randomly.
Pair Corralation between Emerging Markets and Us Core
Assuming the 90 days horizon Emerging Markets Small is expected to under-perform the Us Core. But the mutual fund apears to be less risky and, when comparing its historical volatility, Emerging Markets Small is 1.34 times less risky than Us Core. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Us E Equity is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,861 in Us E Equity on August 31, 2024 and sell it today you would earn a total of 181.00 from holding Us E Equity or generate 4.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerging Markets Small vs. Us E Equity
Performance |
| Timeline |
| Emerging Markets Small |
| Us E Equity |
Emerging Markets and Us Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Us Core
The main advantage of trading using opposite Emerging Markets and Us Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Us Core 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 Us Core will offset losses from the drop in Us Core's long position.| Emerging Markets vs. Scharf Global Opportunity | Emerging Markets vs. Materials Portfolio Fidelity | Emerging Markets vs. Volumetric Fund Volumetric | Emerging Markets vs. Bbh Partner Fund |
| Us Core vs. International E Equity | Us Core vs. Emerging Markets E | Us Core vs. Dfa Five Year Global | Us Core vs. Us Vector Equity |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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