Correlation Between Floating Rate and Investec Emerging
Can any of the company-specific risk be diversified away by investing in both Floating Rate 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 Floating Rate and Investec Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floating Rate Fund and Investec Emerging Markets, you can compare the effects of market volatilities on Floating Rate 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 Floating Rate with a short position of Investec Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floating Rate and Investec Emerging.
Diversification Opportunities for Floating Rate and Investec Emerging
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Floating and Investec is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Floating Rate Fund 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 Floating Rate 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 Floating Rate Fund 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 Floating Rate i.e., Floating Rate and Investec Emerging go up and down completely randomly.
Pair Corralation between Floating Rate and Investec Emerging
Assuming the 90 days horizon Floating Rate Fund is not expected to generate positive returns. However, Floating Rate Fund is 17.86 times less risky than Investec Emerging. It waists most of its returns potential to compensate for thr risk taken. Investec Emerging is generating about 0.13 per unit of risk. If you would invest 1,066 in Investec Emerging Markets on November 1, 2024 and sell it today you would earn a total of 28.00 from holding Investec Emerging Markets or generate 2.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Floating Rate Fund vs. Investec Emerging Markets
Performance |
| Timeline |
| Floating Rate |
| Investec Emerging Markets |
Floating Rate and Investec Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floating Rate and Investec Emerging
The main advantage of trading using opposite Floating Rate and Investec Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floating Rate 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.| Floating Rate vs. Precious Metals And | Floating Rate vs. Goldman Sachs Strategic | Floating Rate vs. The Gold Bullion | Floating Rate vs. James Balanced Golden |
| Investec Emerging vs. Qs Global Equity | Investec Emerging vs. Artisan Select Equity | Investec Emerging vs. T Rowe Price | Investec Emerging vs. Old Westbury Fixed |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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