Correlation Between Ashmore Emerging and American Century
Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and American Century 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 Century 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 Century Global, you can compare the effects of market volatilities on Ashmore Emerging and American Century 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 Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and American Century.
Diversification Opportunities for Ashmore Emerging and American Century
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ashmore and American is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and American Century Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Global 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 Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century Global has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and American Century go up and down completely randomly.
Pair Corralation between Ashmore Emerging and American Century
Assuming the 90 days horizon Ashmore Emerging Markets is expected to under-perform the American Century. In addition to that, Ashmore Emerging is 1.05 times more volatile than American Century Global. It trades about -0.15 of its total potential returns per unit of risk. American Century Global is currently generating about 0.19 per unit of volatility. If you would invest 1,389 in American Century Global on September 1, 2024 and sell it today you would earn a total of 47.00 from holding American Century Global or generate 3.38% 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 Century Global
Performance |
| Timeline |
| Ashmore Emerging Markets |
| American Century Global |
Ashmore Emerging and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Emerging and American Century
The main advantage of trading using opposite Ashmore Emerging and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, American Century 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 Century will offset losses from the drop in American Century'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 |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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