Correlation Between Ashmore Emerging and American Beacon
Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and American Beacon 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 American Beacon 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 American Beacon The, you can compare the effects of market volatilities on Ashmore Emerging and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and American Beacon.
Diversification Opportunities for Ashmore Emerging and American Beacon
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ashmore and American is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and American Beacon The in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and American Beacon go up and down completely randomly.
Pair Corralation between Ashmore Emerging and American Beacon
Assuming the 90 days horizon Ashmore Emerging Markets is expected to under-perform the American Beacon. In addition to that, Ashmore Emerging is 1.56 times more volatile than American Beacon The. It trades about -0.15 of its total potential returns per unit of risk. American Beacon The is currently generating about 0.32 per unit of volatility. If you would invest 2,364 in American Beacon The on September 1, 2024 and sell it today you would earn a total of 99.00 from holding American Beacon The or generate 4.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashmore Emerging Markets vs. American Beacon The
Performance |
| Timeline |
| Ashmore Emerging Markets |
| American Beacon |
Ashmore Emerging and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Emerging and American Beacon
The main advantage of trading using opposite Ashmore Emerging and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Ashmore Emerging vs. American Beacon The | Ashmore Emerging vs. Invesco Small Cap | Ashmore Emerging vs. Invesco Asia Pacific | Ashmore Emerging vs. Invesco European Growth |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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