Correlation Between Ashmore Emerging and Invesco Energy
Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and Invesco Energy 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 Invesco Energy 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 Invesco Energy Fund, you can compare the effects of market volatilities on Ashmore Emerging and Invesco Energy 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 Invesco Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and Invesco Energy.
Diversification Opportunities for Ashmore Emerging and Invesco Energy
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ashmore and Invesco is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and Invesco Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Energy 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 Invesco Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Energy has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and Invesco Energy go up and down completely randomly.
Pair Corralation between Ashmore Emerging and Invesco Energy
Assuming the 90 days horizon Ashmore Emerging is expected to generate 2.68 times less return on investment than Invesco Energy. But when comparing it to its historical volatility, Ashmore Emerging Markets is 9.53 times less risky than Invesco Energy. It trades about 0.19 of its potential returns per unit of risk. Invesco Energy Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,181 in Invesco Energy Fund on August 28, 2024 and sell it today you would earn a total of 453.00 from holding Invesco Energy Fund or generate 20.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Ashmore Emerging Markets vs. Invesco Energy Fund
Performance |
| Timeline |
| Ashmore Emerging Markets |
| Invesco Energy |
Ashmore Emerging and Invesco Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Emerging and Invesco Energy
The main advantage of trading using opposite Ashmore Emerging and Invesco Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, Invesco Energy 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 Invesco Energy will offset losses from the drop in Invesco Energy's long position.| Ashmore Emerging vs. Ab Discovery Value | Ashmore Emerging vs. Applied Finance Explorer | Ashmore Emerging vs. Vanguard Small Cap Value | Ashmore Emerging vs. Boston Partners Small |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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