Correlation Between Ashmore Emerging and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and Diamond Hill 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 Diamond Hill 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 Diamond Hill Large, you can compare the effects of market volatilities on Ashmore Emerging and Diamond Hill 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 Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and Diamond Hill.
Diversification Opportunities for Ashmore Emerging and Diamond Hill
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ashmore and Diamond is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and Diamond Hill Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Large 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 Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Large has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and Diamond Hill go up and down completely randomly.
Pair Corralation between Ashmore Emerging and Diamond Hill
Assuming the 90 days horizon Ashmore Emerging is expected to generate 1.56 times less return on investment than Diamond Hill. But when comparing it to its historical volatility, Ashmore Emerging Markets is 3.16 times less risky than Diamond Hill. It trades about 0.22 of its potential returns per unit of risk. Diamond Hill Large is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,174 in Diamond Hill Large on September 12, 2024 and sell it today you would earn a total of 233.00 from holding Diamond Hill Large or generate 19.85% 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. Diamond Hill Large
Performance |
| Timeline |
| Ashmore Emerging Markets |
| Diamond Hill Large |
Ashmore Emerging and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Emerging and Diamond Hill
The main advantage of trading using opposite Ashmore Emerging and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill's long position.| Ashmore Emerging vs. Fidelity New Markets | Ashmore Emerging vs. Fidelity New Markets | Ashmore Emerging vs. Fidelity New Markets | Ashmore Emerging vs. SCOR PK |
| Diamond Hill vs. Ashmore Emerging Markets | Diamond Hill vs. Locorr Market Trend | Diamond Hill vs. Rbc Emerging Markets | Diamond Hill vs. Investec Emerging Markets |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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