Correlation Between Ashmore Emerging and Small Cap
Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and Small Cap 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 Small Cap 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 Small Cap Core, you can compare the effects of market volatilities on Ashmore Emerging and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and Small Cap.
Diversification Opportunities for Ashmore Emerging and Small Cap
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ashmore and Small is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and Small Cap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Core 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Core has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and Small Cap go up and down completely randomly.
Pair Corralation between Ashmore Emerging and Small Cap
Assuming the 90 days horizon Ashmore Emerging Markets is expected to generate 0.2 times more return on investment than Small Cap. However, Ashmore Emerging Markets is 5.02 times less risky than Small Cap. It trades about 0.23 of its potential returns per unit of risk. Small Cap Core is currently generating about -0.32 per unit of risk. If you would invest 574.00 in Ashmore Emerging Markets on December 1, 2024 and sell it today you would earn a total of 6.00 from holding Ashmore Emerging Markets or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashmore Emerging Markets vs. Small Cap Core
Performance |
| Timeline |
| Ashmore Emerging Markets |
| Small Cap Core |
Ashmore Emerging and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Emerging and Small Cap
The main advantage of trading using opposite Ashmore Emerging and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Ashmore Emerging vs. Small Pany Growth | Ashmore Emerging vs. Ep Emerging Markets | Ashmore Emerging vs. Ashmore Emerging Markets | Ashmore Emerging vs. Artisan Small Cap |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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