Correlation Between Ashmore Emerging and Bright Rock
Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and Bright Rock 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 Bright Rock 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 Bright Rock Quality, you can compare the effects of market volatilities on Ashmore Emerging and Bright Rock 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 Bright Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and Bright Rock.
Diversification Opportunities for Ashmore Emerging and Bright Rock
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ashmore and Bright is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and Bright Rock Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Rock Quality 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 Bright Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Rock Quality has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and Bright Rock go up and down completely randomly.
Pair Corralation between Ashmore Emerging and Bright Rock
Assuming the 90 days horizon Ashmore Emerging is expected to generate 1.56 times less return on investment than Bright Rock. But when comparing it to its historical volatility, Ashmore Emerging Markets is 2.65 times less risky than Bright Rock. It trades about 0.24 of its potential returns per unit of risk. Bright Rock Quality is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,000 in Bright Rock Quality on September 14, 2024 and sell it today you would earn a total of 489.00 from holding Bright Rock Quality or generate 24.45% 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. Bright Rock Quality
Performance |
| Timeline |
| Ashmore Emerging Markets |
| Bright Rock Quality |
Ashmore Emerging and Bright Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Emerging and Bright Rock
The main advantage of trading using opposite Ashmore Emerging and Bright Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, Bright Rock 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 Bright Rock will offset losses from the drop in Bright Rock's long position.| Ashmore Emerging vs. Ashmore Emerging Markets | Ashmore Emerging vs. Ashmore Emerging Markets | Ashmore Emerging vs. Ashmore Emerging Markets | Ashmore Emerging vs. Ashmore Emerging Markets |
| Bright Rock vs. Mid Cap 15x Strategy | Bright Rock vs. Ashmore Emerging Markets | Bright Rock vs. Pnc Emerging Markets | Bright Rock vs. Black Oak Emerging |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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