Correlation Between Elfun Diversified and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Elfun Diversified 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 Elfun Diversified and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elfun Diversified Fund and Emerging Markets Fund, you can compare the effects of market volatilities on Elfun Diversified 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 Elfun Diversified with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elfun Diversified and Emerging Markets.
Diversification Opportunities for Elfun Diversified and Emerging Markets
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Elfun and Emerging is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Diversified Fund and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and Elfun Diversified 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 Elfun Diversified Fund 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 Elfun Diversified i.e., Elfun Diversified and Emerging Markets go up and down completely randomly.
Pair Corralation between Elfun Diversified and Emerging Markets
Assuming the 90 days horizon Elfun Diversified Fund is expected to generate 0.55 times more return on investment than Emerging Markets. However, Elfun Diversified Fund is 1.82 times less risky than Emerging Markets. It trades about 0.17 of its potential returns per unit of risk. Emerging Markets Fund is currently generating about 0.07 per unit of risk. If you would invest 2,174 in Elfun Diversified Fund on September 13, 2024 and sell it today you would earn a total of 26.00 from holding Elfun Diversified Fund or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elfun Diversified Fund vs. Emerging Markets Fund
Performance |
| Timeline |
| Elfun Diversified |
| Emerging Markets |
Elfun Diversified and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elfun Diversified and Emerging Markets
The main advantage of trading using opposite Elfun Diversified and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elfun Diversified 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.| Elfun Diversified vs. Loomis Sayles Inflation | Elfun Diversified vs. Lord Abbett Inflation | Elfun Diversified vs. Goldman Sachs Inflation | Elfun Diversified vs. Ab Bond Inflation |
| Emerging Markets vs. Artisan Small Cap | Emerging Markets vs. Praxis Growth Index | Emerging Markets vs. Rational Defensive Growth | Emerging Markets vs. Small Pany 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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