Correlation Between Ashmore Emerging and Biotechnology Ultrasector
Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and Biotechnology Ultrasector 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 Biotechnology Ultrasector 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 Biotechnology Ultrasector Profund, you can compare the effects of market volatilities on Ashmore Emerging and Biotechnology Ultrasector 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 Biotechnology Ultrasector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and Biotechnology Ultrasector.
Diversification Opportunities for Ashmore Emerging and Biotechnology Ultrasector
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ashmore and Biotechnology is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and Biotechnology Ultrasector Prof in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotechnology Ultrasector 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 Biotechnology Ultrasector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotechnology Ultrasector has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and Biotechnology Ultrasector go up and down completely randomly.
Pair Corralation between Ashmore Emerging and Biotechnology Ultrasector
Assuming the 90 days horizon Ashmore Emerging Markets is expected to under-perform the Biotechnology Ultrasector. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ashmore Emerging Markets is 11.38 times less risky than Biotechnology Ultrasector. The mutual fund trades about -0.16 of its potential returns per unit of risk. The Biotechnology Ultrasector Profund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,788 in Biotechnology Ultrasector Profund on August 30, 2024 and sell it today you would earn a total of 107.00 from holding Biotechnology Ultrasector Profund or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashmore Emerging Markets vs. Biotechnology Ultrasector Prof
Performance |
| Timeline |
| Ashmore Emerging Markets |
| Biotechnology Ultrasector |
Ashmore Emerging and Biotechnology Ultrasector Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Emerging and Biotechnology Ultrasector
The main advantage of trading using opposite Ashmore Emerging and Biotechnology Ultrasector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, Biotechnology Ultrasector 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 Biotechnology Ultrasector will offset losses from the drop in Biotechnology Ultrasector's long position.| Ashmore Emerging vs. Barings Global Floating | Ashmore Emerging vs. Artisan Global Unconstrained | Ashmore Emerging vs. Wasatch Global Opportunities | Ashmore Emerging vs. Power Global Tactical |
| Biotechnology Ultrasector vs. Direxion Monthly Nasdaq 100 | Biotechnology Ultrasector vs. HUMANA INC | Biotechnology Ultrasector vs. Aquagold International | Biotechnology Ultrasector vs. Barloworld Ltd ADR |
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 Stocks Directory module to find actively traded stocks across global markets.
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