Correlation Between Hood River and Investec Emerging
Can any of the company-specific risk be diversified away by investing in both Hood River and Investec 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 Hood River and Investec Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hood River New and Investec Emerging Markets, you can compare the effects of market volatilities on Hood River and Investec 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 Hood River with a short position of Investec Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hood River and Investec Emerging.
Diversification Opportunities for Hood River and Investec Emerging
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hood and Investec is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hood River New and Investec Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Emerging Markets and Hood River 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 Hood River New are associated (or correlated) with Investec Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Emerging Markets has no effect on the direction of Hood River i.e., Hood River and Investec Emerging go up and down completely randomly.
Pair Corralation between Hood River and Investec Emerging
Assuming the 90 days horizon Hood River New is expected to generate 1.85 times more return on investment than Investec Emerging. However, Hood River is 1.85 times more volatile than Investec Emerging Markets. It trades about 0.36 of its potential returns per unit of risk. Investec Emerging Markets is currently generating about -0.18 per unit of risk. If you would invest 1,245 in Hood River New on August 28, 2024 and sell it today you would earn a total of 151.00 from holding Hood River New or generate 12.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hood River New vs. Investec Emerging Markets
Performance |
| Timeline |
| Hood River New |
| Investec Emerging Markets |
Hood River and Investec Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hood River and Investec Emerging
The main advantage of trading using opposite Hood River and Investec Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hood River position performs unexpectedly, Investec 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 Investec Emerging will offset losses from the drop in Investec Emerging's long position.| Hood River vs. Lord Abbett Government | Hood River vs. John Hancock Government | Hood River vs. Ab Government Exchange | Hood River vs. Blackrock Government Bond |
| Investec Emerging vs. Ninety One Global | Investec Emerging vs. Investec Global Franchise | Investec Emerging vs. Investec Global Franchise | Investec Emerging vs. Ninety One International |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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