Correlation Between Ashmore Emerging and Commonwealth Australia/new
Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and Commonwealth Australia/new 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 Ashmore Emerging and Commonwealth Australia/new into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashmore Emerging Markets and Commonwealth Australianew Zealand, you can compare the effects of market volatilities on Ashmore Emerging and Commonwealth Australia/new 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 Ashmore Emerging with a short position of Commonwealth Australia/new. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and Commonwealth Australia/new.
Diversification Opportunities for Ashmore Emerging and Commonwealth Australia/new
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ashmore and Commonwealth is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and Commonwealth Australianew Zeal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Australia/new and Ashmore 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 Ashmore Emerging Markets are associated (or correlated) with Commonwealth Australia/new. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Australia/new has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and Commonwealth Australia/new go up and down completely randomly.
Pair Corralation between Ashmore Emerging and Commonwealth Australia/new
Assuming the 90 days horizon Ashmore Emerging Markets is expected to generate 0.8 times more return on investment than Commonwealth Australia/new. However, Ashmore Emerging Markets is 1.24 times less risky than Commonwealth Australia/new. It trades about -0.02 of its potential returns per unit of risk. Commonwealth Australianew Zealand is currently generating about -0.08 per unit of risk. If you would invest 1,056 in Ashmore Emerging Markets on August 26, 2024 and sell it today you would lose (2.00) from holding Ashmore Emerging Markets or give up 0.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashmore Emerging Markets vs. Commonwealth Australianew Zeal
Performance |
| Timeline |
| Ashmore Emerging Markets |
| Commonwealth Australia/new |
Ashmore Emerging and Commonwealth Australia/new Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Emerging and Commonwealth Australia/new
The main advantage of trading using opposite Ashmore Emerging and Commonwealth Australia/new positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, Commonwealth Australia/new 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 Commonwealth Australia/new will offset losses from the drop in Commonwealth Australia/new's long position.| Ashmore Emerging vs. Goehring Rozencwajg Resources | Ashmore Emerging vs. Franklin Natural Resources | Ashmore Emerging vs. Energy Basic Materials | Ashmore Emerging vs. Franklin Natural Resources |
| Commonwealth Australia/new vs. Commonwealth Japan Fund | Commonwealth Australia/new vs. Matthews Asian Growth | Commonwealth Australia/new vs. Guinness Atkinson Asia |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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