Correlation Between North American and Ashmore Group
Can any of the company-specific risk be diversified away by investing in both North American and Ashmore Group 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 North American and Ashmore Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Financial and Ashmore Group Plc, you can compare the effects of market volatilities on North American and Ashmore Group 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 North American with a short position of Ashmore Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and Ashmore Group.
Diversification Opportunities for North American and Ashmore Group
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between North and Ashmore is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding North American Financial and Ashmore Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Group Plc and North American 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 North American Financial are associated (or correlated) with Ashmore Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Group Plc has no effect on the direction of North American i.e., North American and Ashmore Group go up and down completely randomly.
Pair Corralation between North American and Ashmore Group
Assuming the 90 days horizon North American Financial is expected to generate 0.63 times more return on investment than Ashmore Group. However, North American Financial is 1.58 times less risky than Ashmore Group. It trades about 0.3 of its potential returns per unit of risk. Ashmore Group Plc is currently generating about -0.23 per unit of risk. If you would invest 487.00 in North American Financial on November 2, 2024 and sell it today you would earn a total of 30.00 from holding North American Financial or generate 6.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
North American Financial vs. Ashmore Group Plc
Performance |
| Timeline |
| North American Financial |
| Ashmore Group Plc |
North American and Ashmore Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and Ashmore Group
The main advantage of trading using opposite North American and Ashmore Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, Ashmore Group 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 Group will offset losses from the drop in Ashmore Group's long position.| North American vs. Financial 15 Split | North American vs. Clough Global Ef | North American vs. Morgan Stanley India | North American vs. SEI Investments |
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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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