Correlation Between Ashmore Emerging and Institutional Fiduciary
Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and Institutional Fiduciary 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 Institutional Fiduciary 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 Institutional Fiduciary Trust, you can compare the effects of market volatilities on Ashmore Emerging and Institutional Fiduciary 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 Institutional Fiduciary. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and Institutional Fiduciary.
Diversification Opportunities for Ashmore Emerging and Institutional Fiduciary
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ashmore and Institutional is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and Institutional Fiduciary Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Institutional Fiduciary 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 Institutional Fiduciary. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Institutional Fiduciary has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and Institutional Fiduciary go up and down completely randomly.
Pair Corralation between Ashmore Emerging and Institutional Fiduciary
Assuming the 90 days horizon Ashmore Emerging is expected to generate 42.02 times less return on investment than Institutional Fiduciary. But when comparing it to its historical volatility, Ashmore Emerging Markets is 188.73 times less risky than Institutional Fiduciary. It trades about 0.19 of its potential returns per unit of risk. Institutional Fiduciary Trust is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 94.00 in Institutional Fiduciary Trust on August 28, 2024 and sell it today you would earn a total of 6.00 from holding Institutional Fiduciary Trust or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Ashmore Emerging Markets vs. Institutional Fiduciary Trust
Performance |
| Timeline |
| Ashmore Emerging Markets |
| Institutional Fiduciary |
Ashmore Emerging and Institutional Fiduciary Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Emerging and Institutional Fiduciary
The main advantage of trading using opposite Ashmore Emerging and Institutional Fiduciary positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, Institutional Fiduciary 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 Institutional Fiduciary will offset losses from the drop in Institutional Fiduciary'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 |
| Institutional Fiduciary vs. Vanguard Total Stock | Institutional Fiduciary vs. Vanguard 500 Index | Institutional Fiduciary vs. Vanguard Total Stock | Institutional Fiduciary vs. Vanguard Total Stock |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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