Correlation Between American Funds and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Ashmore Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds New and Ashmore Emerging Markets, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Ashmore Emerging.
Diversification Opportunities for American Funds and Ashmore Emerging
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Ashmore is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding American Funds New 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 American Funds 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 American Funds New 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 American Funds i.e., American Funds and Ashmore Emerging go up and down completely randomly.
Pair Corralation between American Funds and Ashmore Emerging
Assuming the 90 days horizon American Funds is expected to generate 1.13 times less return on investment than Ashmore Emerging. But when comparing it to its historical volatility, American Funds New is 1.34 times less risky than Ashmore Emerging. It trades about 0.16 of its potential returns per unit of risk. Ashmore Emerging Markets is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,040 in Ashmore Emerging Markets on November 3, 2024 and sell it today you would earn a total of 27.00 from holding Ashmore Emerging Markets or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
American Funds New vs. Ashmore Emerging Markets
Performance |
| Timeline |
| American Funds New |
| Ashmore Emerging Markets |
American Funds and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Ashmore Emerging
The main advantage of trading using opposite American Funds and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Small Cap Value Fund | American Funds vs. Amg River Road | American Funds vs. Valic Company I | American Funds vs. Mutual Of America |
| Ashmore Emerging vs. Enhanced Fixed Income | Ashmore Emerging vs. The Growth Equity | Ashmore Emerging vs. Locorr Dynamic Equity | Ashmore Emerging vs. Doubleline Core Fixed |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |