Correlation Between Regional Bank and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Regional Bank and Emerging Markets 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 Regional Bank and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Bank Fund and Emerging Markets Fund, you can compare the effects of market volatilities on Regional Bank and Emerging Markets 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 Regional Bank with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Bank and Emerging Markets.
Diversification Opportunities for Regional Bank and Emerging Markets
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Regional and Emerging is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Regional Bank Fund and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and Regional Bank 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 Regional Bank Fund are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Regional Bank i.e., Regional Bank and Emerging Markets go up and down completely randomly.
Pair Corralation between Regional Bank and Emerging Markets
Assuming the 90 days horizon Regional Bank Fund is expected to under-perform the Emerging Markets. In addition to that, Regional Bank is 1.44 times more volatile than Emerging Markets Fund. It trades about -0.09 of its total potential returns per unit of risk. Emerging Markets Fund is currently generating about -0.02 per unit of volatility. If you would invest 898.00 in Emerging Markets Fund on December 1, 2024 and sell it today you would lose (3.00) from holding Emerging Markets Fund or give up 0.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Bank Fund vs. Emerging Markets Fund
Performance |
| Timeline |
| Regional Bank |
| Emerging Markets |
Regional Bank and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Bank and Emerging Markets
The main advantage of trading using opposite Regional Bank and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Bank position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Regional Bank vs. Touchstone Sands Capital | Regional Bank vs. Morgan Stanley Institutional | Regional Bank vs. Tfa Alphagen Growth | Regional Bank vs. Profunds Large Cap Growth |
| Emerging Markets vs. Fa 529 Aggressive | Emerging Markets vs. Ftufox | Emerging Markets vs. Fdzbpx | Emerging Markets vs. Fwnhtx |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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