Correlation Between Ashmore Emerging and Multimanager Lifestyle
Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and Multimanager Lifestyle 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 Multimanager Lifestyle 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 Multimanager Lifestyle Aggressive, you can compare the effects of market volatilities on Ashmore Emerging and Multimanager Lifestyle 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 Multimanager Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and Multimanager Lifestyle.
Diversification Opportunities for Ashmore Emerging and Multimanager Lifestyle
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ashmore and Multimanager is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and Multimanager Lifestyle Aggress in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multimanager Lifestyle 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 Multimanager Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multimanager Lifestyle has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and Multimanager Lifestyle go up and down completely randomly.
Pair Corralation between Ashmore Emerging and Multimanager Lifestyle
Assuming the 90 days horizon Ashmore Emerging Markets is expected to generate 0.81 times more return on investment than Multimanager Lifestyle. However, Ashmore Emerging Markets is 1.24 times less risky than Multimanager Lifestyle. It trades about 0.04 of its potential returns per unit of risk. Multimanager Lifestyle Aggressive is currently generating about -0.04 per unit of risk. If you would invest 1,278 in Ashmore Emerging Markets on November 28, 2024 and sell it today you would earn a total of 5.00 from holding Ashmore Emerging Markets or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashmore Emerging Markets vs. Multimanager Lifestyle Aggress
Performance |
| Timeline |
| Ashmore Emerging Markets |
| Multimanager Lifestyle |
Ashmore Emerging and Multimanager Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Emerging and Multimanager Lifestyle
The main advantage of trading using opposite Ashmore Emerging and Multimanager Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, Multimanager Lifestyle 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 Multimanager Lifestyle will offset losses from the drop in Multimanager Lifestyle's long position.| Ashmore Emerging vs. Metropolitan West High | Ashmore Emerging vs. Prudential High Yield | Ashmore Emerging vs. Access Flex High | Ashmore Emerging vs. Msift High Yield |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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