Correlation Between Europac Gold and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Europac Gold and Emerging Markets 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 Europac Gold and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europac Gold Fund and Emerging Markets Fund, you can compare the effects of market volatilities on Europac Gold and Emerging Markets 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 Europac Gold with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europac Gold and Emerging Markets.
Diversification Opportunities for Europac Gold and Emerging Markets
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Europac and Emerging is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Europac Gold Fund and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and Europac Gold 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 Europac Gold Fund are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Europac Gold i.e., Europac Gold and Emerging Markets go up and down completely randomly.
Pair Corralation between Europac Gold and Emerging Markets
Assuming the 90 days horizon Europac Gold Fund is expected to under-perform the Emerging Markets. In addition to that, Europac Gold is 2.75 times more volatile than Emerging Markets Fund. It trades about -0.13 of its total potential returns per unit of risk. Emerging Markets Fund is currently generating about -0.12 per unit of volatility. If you would invest 1,518 in Emerging Markets Fund on September 1, 2024 and sell it today you would lose (33.00) from holding Emerging Markets Fund or give up 2.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Europac Gold Fund vs. Emerging Markets Fund
Performance |
| Timeline |
| Europac Gold |
| Emerging Markets |
Europac Gold and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europac Gold and Emerging Markets
The main advantage of trading using opposite Europac Gold and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europac Gold position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Europac Gold vs. Europac International Value | Europac Gold vs. Europac International Dividend | Europac Gold vs. Ep Emerging Markets | Europac Gold vs. Europac International Bond |
| Emerging Markets vs. International Developed Markets | Emerging Markets vs. Global Real Estate | Emerging Markets vs. Global Real Estate | Emerging Markets vs. Global Real Estate |
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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