Correlation Between Ashmore Emerging and Davis Financial
Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and Davis Financial 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 Davis Financial 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 Davis Financial Fund, you can compare the effects of market volatilities on Ashmore Emerging and Davis Financial 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 Davis Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and Davis Financial.
Diversification Opportunities for Ashmore Emerging and Davis Financial
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ashmore and Davis is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and Davis Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davis Financial 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 Davis Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davis Financial has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and Davis Financial go up and down completely randomly.
Pair Corralation between Ashmore Emerging and Davis Financial
Assuming the 90 days horizon Ashmore Emerging Markets is expected to under-perform the Davis Financial. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ashmore Emerging Markets is 3.35 times less risky than Davis Financial. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Davis Financial Fund is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 6,308 in Davis Financial Fund on October 20, 2024 and sell it today you would earn a total of 344.00 from holding Davis Financial Fund or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashmore Emerging Markets vs. Davis Financial Fund
Performance |
| Timeline |
| Ashmore Emerging Markets |
| Davis Financial |
Ashmore Emerging and Davis Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Emerging and Davis Financial
The main advantage of trading using opposite Ashmore Emerging and Davis Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, Davis Financial 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 Davis Financial will offset losses from the drop in Davis Financial's long position.| Ashmore Emerging vs. Us Vector Equity | Ashmore Emerging vs. Dreyfusstandish Global Fixed | Ashmore Emerging vs. T Rowe Price | Ashmore Emerging vs. Aqr Long Short Equity |
| Davis Financial vs. Ashmore Emerging Markets | Davis Financial vs. Barings Emerging Markets | Davis Financial vs. Kinetics Market Opportunities | Davis Financial vs. Alphacentric Hedged Market |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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