Correlation Between Ep Emerging and Investment Quality
Can any of the company-specific risk be diversified away by investing in both Ep Emerging and Investment Quality 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 Investment Quality 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 Investment Quality Bond, you can compare the effects of market volatilities on Ep Emerging and Investment Quality 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 Investment Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ep Emerging and Investment Quality.
Diversification Opportunities for Ep Emerging and Investment Quality
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EPEIX and Investment is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ep Emerging Markets and Investment Quality Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Quality Bond 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 Investment Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Quality Bond has no effect on the direction of Ep Emerging i.e., Ep Emerging and Investment Quality go up and down completely randomly.
Pair Corralation between Ep Emerging and Investment Quality
Assuming the 90 days horizon Ep Emerging Markets is expected to generate 2.82 times more return on investment than Investment Quality. However, Ep Emerging is 2.82 times more volatile than Investment Quality Bond. It trades about 0.25 of its potential returns per unit of risk. Investment Quality Bond is currently generating about 0.16 per unit of risk. If you would invest 989.00 in Ep Emerging Markets on November 27, 2024 and sell it today you would earn a total of 29.00 from holding Ep Emerging Markets or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ep Emerging Markets vs. Investment Quality Bond
Performance |
| Timeline |
| Ep Emerging Markets |
| Investment Quality Bond |
Ep Emerging and Investment Quality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ep Emerging and Investment Quality
The main advantage of trading using opposite Ep Emerging and Investment Quality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ep Emerging position performs unexpectedly, Investment Quality 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 Investment Quality will offset losses from the drop in Investment Quality's long position.| Ep Emerging vs. Legg Mason Partners | Ep Emerging vs. United Kingdom Small | Ep Emerging vs. Goldman Sachs Small | Ep Emerging vs. Touchstone Small Cap |
| Investment Quality vs. Ashmore Emerging Markets | Investment Quality vs. Rbc Small Cap | Investment Quality vs. Ep Emerging Markets | Investment Quality vs. Nt International Small Mid |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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