Correlation Between Ashmore Emerging and Aqr Equity
Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and Aqr Equity 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 Ashmore Emerging and Aqr Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashmore Emerging Markets and Aqr Equity Market, you can compare the effects of market volatilities on Ashmore Emerging and Aqr Equity 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 Ashmore Emerging with a short position of Aqr Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and Aqr Equity.
Diversification Opportunities for Ashmore Emerging and Aqr Equity
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ashmore and Aqr is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and Aqr Equity Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Equity Market and Ashmore Emerging 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 Ashmore Emerging Markets are associated (or correlated) with Aqr Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Equity Market has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and Aqr Equity go up and down completely randomly.
Pair Corralation between Ashmore Emerging and Aqr Equity
Assuming the 90 days horizon Ashmore Emerging is expected to generate 2.29 times less return on investment than Aqr Equity. But when comparing it to its historical volatility, Ashmore Emerging Markets is 1.05 times less risky than Aqr Equity. It trades about 0.09 of its potential returns per unit of risk. Aqr Equity Market is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 689.00 in Aqr Equity Market on December 2, 2024 and sell it today you would earn a total of 362.00 from holding Aqr Equity Market or generate 52.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashmore Emerging Markets vs. Aqr Equity Market
Performance |
| Timeline |
| Ashmore Emerging Markets |
| Aqr Equity Market |
Ashmore Emerging and Aqr Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Emerging and Aqr Equity
The main advantage of trading using opposite Ashmore Emerging and Aqr Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, Aqr Equity 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 Aqr Equity will offset losses from the drop in Aqr Equity's long position.| Ashmore Emerging vs. Siit Ultra Short | ||
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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