Correlation Between Ashmore Emerging and Hennessy Nerstone
Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and Hennessy Nerstone 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 Hennessy Nerstone 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 Hennessy Nerstone Large, you can compare the effects of market volatilities on Ashmore Emerging and Hennessy Nerstone 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 Hennessy Nerstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and Hennessy Nerstone.
Diversification Opportunities for Ashmore Emerging and Hennessy Nerstone
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ashmore and Hennessy is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and Hennessy Nerstone Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Nerstone Large 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 Hennessy Nerstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Nerstone Large has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and Hennessy Nerstone go up and down completely randomly.
Pair Corralation between Ashmore Emerging and Hennessy Nerstone
Assuming the 90 days horizon Ashmore Emerging is expected to generate 2.21 times less return on investment than Hennessy Nerstone. But when comparing it to its historical volatility, Ashmore Emerging Markets is 7.17 times less risky than Hennessy Nerstone. It trades about 0.18 of its potential returns per unit of risk. Hennessy Nerstone Large is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 954.00 in Hennessy Nerstone Large on September 12, 2024 and sell it today you would earn a total of 260.00 from holding Hennessy Nerstone Large or generate 27.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashmore Emerging Markets vs. Hennessy Nerstone Large
Performance |
| Timeline |
| Ashmore Emerging Markets |
| Hennessy Nerstone Large |
Ashmore Emerging and Hennessy Nerstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Emerging and Hennessy Nerstone
The main advantage of trading using opposite Ashmore Emerging and Hennessy Nerstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, Hennessy Nerstone 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 Hennessy Nerstone will offset losses from the drop in Hennessy Nerstone's long position.| Ashmore Emerging vs. Voya High Yield | Ashmore Emerging vs. Buffalo High Yield | Ashmore Emerging vs. Msift High Yield | Ashmore Emerging vs. T Rowe Price |
| Hennessy Nerstone vs. The National Tax Free | Hennessy Nerstone vs. Western Asset Municipal | Hennessy Nerstone vs. Alliancebernstein National Municipal | Hennessy Nerstone vs. Pace 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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