Correlation Between Ashmore Emerging and Inverse Emerging
Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and Inverse 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 Ashmore Emerging and Inverse Emerging 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 Inverse Emerging Markets, you can compare the effects of market volatilities on Ashmore Emerging and Inverse 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 Ashmore Emerging with a short position of Inverse Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and Inverse Emerging.
Diversification Opportunities for Ashmore Emerging and Inverse Emerging
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ashmore and Inverse is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and Inverse Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Emerging Markets 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 Inverse Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Emerging Markets has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and Inverse Emerging go up and down completely randomly.
Pair Corralation between Ashmore Emerging and Inverse Emerging
Assuming the 90 days horizon Ashmore Emerging Markets is expected to under-perform the Inverse Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ashmore Emerging Markets is 5.82 times less risky than Inverse Emerging. The mutual fund trades about -0.36 of its potential returns per unit of risk. The Inverse Emerging Markets is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 812.00 in Inverse Emerging Markets on October 11, 2024 and sell it today you would earn a total of 40.00 from holding Inverse Emerging Markets or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Ashmore Emerging Markets vs. Inverse Emerging Markets
Performance |
| Timeline |
| Ashmore Emerging Markets |
| Inverse Emerging Markets |
Ashmore Emerging and Inverse Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Emerging and Inverse Emerging
The main advantage of trading using opposite Ashmore Emerging and Inverse Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, Inverse 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 Inverse Emerging will offset losses from the drop in Inverse Emerging's long position.| Ashmore Emerging vs. Qs Moderate Growth | Ashmore Emerging vs. Transamerica Cleartrack Retirement | Ashmore Emerging vs. Qs Moderate Growth | Ashmore Emerging vs. Columbia Moderate Growth |
| Inverse Emerging vs. Origin Emerging Markets | Inverse Emerging vs. Black Oak Emerging | Inverse Emerging vs. Virtus Multi Strategy Target | Inverse Emerging vs. Nasdaq 100 2x Strategy |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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