Correlation Between Free Market and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both Free Market and Ashmore Emerging 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 Free Market and Ashmore Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Free Market Equity and Ashmore Emerging Markets, you can compare the effects of market volatilities on Free Market and Ashmore Emerging 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 Free Market with a short position of Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Free Market and Ashmore Emerging.
Diversification Opportunities for Free Market and Ashmore Emerging
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Free and Ashmore is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Free Market Equity and Ashmore Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Emerging Markets and Free Market 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 Free Market Equity are associated (or correlated) with Ashmore Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Emerging Markets has no effect on the direction of Free Market i.e., Free Market and Ashmore Emerging go up and down completely randomly.
Pair Corralation between Free Market and Ashmore Emerging
Assuming the 90 days horizon Free Market Equity is expected to generate 3.43 times more return on investment than Ashmore Emerging. However, Free Market is 3.43 times more volatile than Ashmore Emerging Markets. It trades about 0.07 of its potential returns per unit of risk. Ashmore Emerging Markets is currently generating about 0.13 per unit of risk. If you would invest 1,949 in Free Market Equity on September 3, 2024 and sell it today you would earn a total of 712.00 from holding Free Market Equity or generate 36.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Free Market Equity vs. Ashmore Emerging Markets
Performance |
| Timeline |
| Free Market Equity |
| Ashmore Emerging Markets |
Free Market and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Free Market and Ashmore Emerging
The main advantage of trading using opposite Free Market and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Free Market position performs unexpectedly, Ashmore Emerging 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 Ashmore Emerging will offset losses from the drop in Ashmore Emerging's long position.| Free Market vs. Pace Smallmedium Value | Free Market vs. Hennessy Nerstone Mid | Free Market vs. Royce Opportunity Fund | Free Market vs. American Century Etf |
| Ashmore Emerging vs. Goldman Sachs Growth | Ashmore Emerging vs. Nationwide Growth Fund | Ashmore Emerging vs. Franklin Growth Opportunities | Ashmore Emerging vs. Smallcap Growth Fund |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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