Correlation Between Ep Emerging and Biotechnology Fund
Can any of the company-specific risk be diversified away by investing in both Ep Emerging and Biotechnology Fund 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 Ep Emerging and Biotechnology Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ep Emerging Markets and Biotechnology Fund Class, you can compare the effects of market volatilities on Ep Emerging and Biotechnology Fund 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 Ep Emerging with a short position of Biotechnology Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ep Emerging and Biotechnology Fund.
Diversification Opportunities for Ep Emerging and Biotechnology Fund
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between EPASX and Biotechnology is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ep Emerging Markets and Biotechnology Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotechnology Fund Class and Ep 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 Ep Emerging Markets are associated (or correlated) with Biotechnology Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotechnology Fund Class has no effect on the direction of Ep Emerging i.e., Ep Emerging and Biotechnology Fund go up and down completely randomly.
Pair Corralation between Ep Emerging and Biotechnology Fund
Assuming the 90 days horizon Ep Emerging is expected to generate 1.47 times less return on investment than Biotechnology Fund. But when comparing it to its historical volatility, Ep Emerging Markets is 1.34 times less risky than Biotechnology Fund. It trades about 0.03 of its potential returns per unit of risk. Biotechnology Fund Class is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,239 in Biotechnology Fund Class on September 14, 2024 and sell it today you would earn a total of 516.00 from holding Biotechnology Fund Class or generate 8.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ep Emerging Markets vs. Biotechnology Fund Class
Performance |
| Timeline |
| Ep Emerging Markets |
| Biotechnology Fund Class |
Ep Emerging and Biotechnology Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ep Emerging and Biotechnology Fund
The main advantage of trading using opposite Ep Emerging and Biotechnology Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ep Emerging position performs unexpectedly, Biotechnology Fund 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 Biotechnology Fund will offset losses from the drop in Biotechnology Fund's long position.| Ep Emerging vs. Europac International Bond | Ep Emerging vs. Europac International Dividend | Ep Emerging vs. Ep Emerging Markets | Ep Emerging vs. Investment Managers Series |
| Biotechnology Fund vs. Basic Materials Fund | Biotechnology Fund vs. Basic Materials Fund | Biotechnology Fund vs. Banking Fund Class | Biotechnology Fund vs. Basic Materials Fund |
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 Stocks Directory module to find actively traded stocks across global markets.
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