Correlation Between Limited Term and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both Limited Term 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 Limited Term and Ashmore Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Limited Term Tax and Ashmore Emerging Markets, you can compare the effects of market volatilities on Limited Term 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 Limited Term with a short position of Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Limited Term and Ashmore Emerging.
Diversification Opportunities for Limited Term and Ashmore Emerging
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LIMITED and Ashmore is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Limited Term Tax 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 Limited Term 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 Limited Term Tax 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 Limited Term i.e., Limited Term and Ashmore Emerging go up and down completely randomly.
Pair Corralation between Limited Term and Ashmore Emerging
Assuming the 90 days horizon Limited Term is expected to generate 2.63 times less return on investment than Ashmore Emerging. But when comparing it to its historical volatility, Limited Term Tax is 1.42 times less risky than Ashmore Emerging. It trades about 0.04 of its potential returns per unit of risk. Ashmore Emerging Markets is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 571.00 in Ashmore Emerging Markets on September 4, 2024 and sell it today you would earn a total of 6.00 from holding Ashmore Emerging Markets or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Limited Term Tax vs. Ashmore Emerging Markets
Performance |
| Timeline |
| Limited Term Tax |
| Ashmore Emerging Markets |
Limited Term and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Limited Term and Ashmore Emerging
The main advantage of trading using opposite Limited Term and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Limited Term 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.| Limited Term vs. Tax Exempt Bond | Limited Term vs. Intermediate Bond Fund | Limited Term vs. American High Income Municipal | Limited Term vs. Us Government Securities |
| Ashmore Emerging vs. California High Yield Municipal | Ashmore Emerging vs. Federated Pennsylvania Municipal | Ashmore Emerging vs. Transamerica Funds | Ashmore Emerging vs. Limited Term Tax |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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