Correlation Between Global Technology and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both Global Technology and Ashmore 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 Global Technology and Ashmore Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Technology Portfolio and Ashmore Emerging Markets, you can compare the effects of market volatilities on Global Technology and Ashmore 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 Global Technology with a short position of Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Technology and Ashmore Emerging.
Diversification Opportunities for Global Technology and Ashmore Emerging
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Ashmore is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Global Technology Portfolio and Ashmore Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Emerging Markets and Global Technology 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 Global Technology Portfolio are associated (or correlated) with Ashmore Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Emerging Markets has no effect on the direction of Global Technology i.e., Global Technology and Ashmore Emerging go up and down completely randomly.
Pair Corralation between Global Technology and Ashmore Emerging
Assuming the 90 days horizon Global Technology Portfolio is expected to generate 12.06 times more return on investment than Ashmore Emerging. However, Global Technology is 12.06 times more volatile than Ashmore Emerging Markets. It trades about 0.1 of its potential returns per unit of risk. Ashmore Emerging Markets is currently generating about -0.12 per unit of risk. If you would invest 2,045 in Global Technology Portfolio on August 29, 2024 and sell it today you would earn a total of 93.00 from holding Global Technology Portfolio or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Technology Portfolio vs. Ashmore Emerging Markets
Performance |
| Timeline |
| Global Technology |
| Ashmore Emerging Markets |
Global Technology and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Technology and Ashmore Emerging
The main advantage of trading using opposite Global Technology and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Technology position performs unexpectedly, Ashmore 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 Ashmore Emerging will offset losses from the drop in Ashmore Emerging's long position.| Global Technology vs. Qs Large Cap | Global Technology vs. Goldman Sachs Large | Global Technology vs. Upright Assets Allocation | Global Technology vs. T Rowe Price |
| Ashmore Emerging vs. Technology Ultrasector Profund | Ashmore Emerging vs. Pgim Jennison Technology | Ashmore Emerging vs. Dreyfus Technology Growth | Ashmore Emerging vs. Global Technology Portfolio |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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