Correlation Between Multisector Bond and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both Multisector Bond 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 Multisector Bond and Ashmore Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multisector Bond Sma and Ashmore Emerging Markets, you can compare the effects of market volatilities on Multisector Bond 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 Multisector Bond with a short position of Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multisector Bond and Ashmore Emerging.
Diversification Opportunities for Multisector Bond and Ashmore Emerging
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Multisector and Ashmore is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Multisector Bond Sma 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 Multisector Bond 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 Multisector Bond Sma 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 Multisector Bond i.e., Multisector Bond and Ashmore Emerging go up and down completely randomly.
Pair Corralation between Multisector Bond and Ashmore Emerging
Assuming the 90 days horizon Multisector Bond Sma is expected to generate 0.74 times more return on investment than Ashmore Emerging. However, Multisector Bond Sma is 1.35 times less risky than Ashmore Emerging. It trades about -0.05 of its potential returns per unit of risk. Ashmore Emerging Markets is currently generating about -0.11 per unit of risk. If you would invest 1,350 in Multisector Bond Sma on October 16, 2024 and sell it today you would lose (7.00) from holding Multisector Bond Sma or give up 0.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.44% |
| Values | Daily Returns |
Multisector Bond Sma vs. Ashmore Emerging Markets
Performance |
| Timeline |
| Multisector Bond Sma |
| Ashmore Emerging Markets |
Multisector Bond and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multisector Bond and Ashmore Emerging
The main advantage of trading using opposite Multisector Bond and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multisector Bond 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.| Multisector Bond vs. Dws Government Money | Multisector Bond vs. Ab Government Exchange | Multisector Bond vs. Intermediate Government Bond | Multisector Bond vs. Franklin Adjustable Government |
| Ashmore Emerging vs. Alliancebernstein Bond | Ashmore Emerging vs. T Rowe Price | Ashmore Emerging vs. Multisector Bond Sma | Ashmore Emerging vs. Franklin High Yield |
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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