Correlation Between Ashmore Emerging and Gmo High
Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and Gmo High 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 Gmo High 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 Gmo High Yield, you can compare the effects of market volatilities on Ashmore Emerging and Gmo High 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 Gmo High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and Gmo High.
Diversification Opportunities for Ashmore Emerging and Gmo High
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ASHMORE and Gmo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and Gmo High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo High Yield 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 Gmo High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo High Yield has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and Gmo High go up and down completely randomly.
Pair Corralation between Ashmore Emerging and Gmo High
Assuming the 90 days horizon Ashmore Emerging is expected to generate 2.19 times less return on investment than Gmo High. But when comparing it to its historical volatility, Ashmore Emerging Markets is 2.6 times less risky than Gmo High. It trades about 0.17 of its potential returns per unit of risk. Gmo High Yield is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,530 in Gmo High Yield on August 31, 2024 and sell it today you would earn a total of 274.00 from holding Gmo High Yield or generate 17.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashmore Emerging Markets vs. Gmo High Yield
Performance |
| Timeline |
| Ashmore Emerging Markets |
| Gmo High Yield |
Ashmore Emerging and Gmo High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Emerging and Gmo High
The main advantage of trading using opposite Ashmore Emerging and Gmo High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, Gmo High 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 Gmo High will offset losses from the drop in Gmo High's long position.| Ashmore Emerging vs. Fidelity New Markets | Ashmore Emerging vs. Fidelity New Markets | Ashmore Emerging vs. Fidelity New Markets | Ashmore Emerging vs. Mfs Emerging Markets |
| Gmo High vs. Vanguard High Yield Corporate | Gmo High vs. Vanguard High Yield Porate | Gmo High vs. Blackrock Hi Yld | Gmo High vs. Blackrock High Yield |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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