Correlation Between EM and REDLANG
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By analyzing existing cross correlation between EM and REDLANG, you can compare the effects of market volatilities on EM and REDLANG 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 EM with a short position of REDLANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of EM and REDLANG.
Diversification Opportunities for EM and REDLANG
Pay attention - limited upside
The 3 months correlation between EM and REDLANG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EM and REDLANG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REDLANG and EM 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 EM are associated (or correlated) with REDLANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REDLANG has no effect on the direction of EM i.e., EM and REDLANG go up and down completely randomly.
Pair Corralation between EM and REDLANG
If you would invest 0.01 in EM on November 8, 2024 and sell it today you would earn a total of 0.00 from holding EM or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
EM vs. REDLANG
Performance |
| Timeline |
| EM |
| REDLANG |
EM and REDLANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EM and REDLANG
The main advantage of trading using opposite EM and REDLANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EM position performs unexpectedly, REDLANG 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 REDLANG will offset losses from the drop in REDLANG's long position.The idea behind EM and REDLANG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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