Correlation Between Ashmore Emerging and California High
Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and California 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 California 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 California High Yield Municipal, you can compare the effects of market volatilities on Ashmore Emerging and California 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 California High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and California High.
Diversification Opportunities for Ashmore Emerging and California High
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ashmore and California is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and California High Yield Municipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California 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 California High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California High Yield has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and California High go up and down completely randomly.
Pair Corralation between Ashmore Emerging and California High
Assuming the 90 days horizon Ashmore Emerging Markets is expected to under-perform the California High. In addition to that, Ashmore Emerging is 1.96 times more volatile than California High Yield Municipal. It trades about -0.07 of its total potential returns per unit of risk. California High Yield Municipal is currently generating about 0.46 per unit of volatility. If you would invest 983.00 in California High Yield Municipal on September 12, 2024 and sell it today you would earn a total of 13.00 from holding California High Yield Municipal or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ashmore Emerging Markets vs. California High Yield Municipa
Performance |
| Timeline |
| Ashmore Emerging Markets |
| California High Yield |
Ashmore Emerging and California High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Emerging and California High
The main advantage of trading using opposite Ashmore Emerging and California High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, California 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 California High will offset losses from the drop in California High's long position.| Ashmore Emerging vs. Dreyfus Natural Resources | Ashmore Emerging vs. Franklin Natural Resources | Ashmore Emerging vs. Invesco Energy Fund | Ashmore Emerging vs. Calvert Global Energy |
| California High vs. T Rowe Price | California High vs. Bbh Intermediate Municipal | California High vs. Ab Bond Inflation | California High vs. Blrc Sgy Mnp |
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