Correlation Between Ashmore Emerging and Sustainable Equity
Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and Sustainable Equity 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 Sustainable Equity 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 Sustainable Equity Fund, you can compare the effects of market volatilities on Ashmore Emerging and Sustainable Equity 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 Sustainable Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and Sustainable Equity.
Diversification Opportunities for Ashmore Emerging and Sustainable Equity
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ashmore and Sustainable is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and Sustainable Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sustainable Equity 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 Sustainable Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sustainable Equity has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and Sustainable Equity go up and down completely randomly.
Pair Corralation between Ashmore Emerging and Sustainable Equity
Assuming the 90 days horizon Ashmore Emerging Markets is expected to under-perform the Sustainable Equity. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ashmore Emerging Markets is 4.45 times less risky than Sustainable Equity. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Sustainable Equity Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,358 in Sustainable Equity Fund on October 21, 2024 and sell it today you would earn a total of 59.00 from holding Sustainable Equity Fund or generate 1.1% 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. Sustainable Equity Fund
Performance |
| Timeline |
| Ashmore Emerging Markets |
| Sustainable Equity |
Ashmore Emerging and Sustainable Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Emerging and Sustainable Equity
The main advantage of trading using opposite Ashmore Emerging and Sustainable Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, Sustainable Equity 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 Sustainable Equity will offset losses from the drop in Sustainable Equity's long position.| Ashmore Emerging vs. Needham Aggressive Growth | Ashmore Emerging vs. Dunham High Yield | Ashmore Emerging vs. Fidelity Focused High | Ashmore Emerging vs. Americafirst Monthly Risk On |
| Sustainable Equity vs. Mid Cap Value | Sustainable Equity vs. Equity Growth Fund | Sustainable Equity vs. Income Growth Fund | Sustainable Equity vs. Diversified Bond Fund |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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