Correlation Between Ashmore Emerging and Western Assets
Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and Western Assets 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 Western Assets 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 Western Assets Emerging, you can compare the effects of market volatilities on Ashmore Emerging and Western Assets 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 Western Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and Western Assets.
Diversification Opportunities for Ashmore Emerging and Western Assets
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ashmore and Western is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and Western Assets Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Assets Emerging 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 Western Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Assets Emerging has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and Western Assets go up and down completely randomly.
Pair Corralation between Ashmore Emerging and Western Assets
Assuming the 90 days horizon Ashmore Emerging is expected to generate 1.14 times less return on investment than Western Assets. But when comparing it to its historical volatility, Ashmore Emerging Markets is 1.74 times less risky than Western Assets. It trades about 0.18 of its potential returns per unit of risk. Western Assets Emerging is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 978.00 in Western Assets Emerging on August 28, 2024 and sell it today you would earn a total of 91.00 from holding Western Assets Emerging or generate 9.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
Ashmore Emerging Markets vs. Western Assets Emerging
Performance |
| Timeline |
| Ashmore Emerging Markets |
| Western Assets Emerging |
Ashmore Emerging and Western Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Emerging and Western Assets
The main advantage of trading using opposite Ashmore Emerging and Western Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, Western Assets 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 Western Assets will offset losses from the drop in Western Assets' long position.| Ashmore Emerging vs. Massmutual Premier Diversified | Ashmore Emerging vs. Oaktree Diversifiedome | Ashmore Emerging vs. Western Asset Diversified | Ashmore Emerging vs. Fidelity Advisor Diversified |
| Western Assets vs. Federated Mdt Large | Western Assets vs. Knights Of Umbus | Western Assets vs. Goldman Sachs Large | Western Assets vs. Qs Large Cap |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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