Correlation Between MAYBANK EMERGING and First Trust
Can any of the company-specific risk be diversified away by investing in both MAYBANK EMERGING and First Trust 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 MAYBANK EMERGING and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAYBANK EMERGING ETF and First Trust Asia, you can compare the effects of market volatilities on MAYBANK EMERGING and First Trust 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 MAYBANK EMERGING with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAYBANK EMERGING and First Trust.
Diversification Opportunities for MAYBANK EMERGING and First Trust
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MAYBANK and First is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding MAYBANK EMERGING ETF and First Trust Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Asia and MAYBANK 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 MAYBANK EMERGING ETF are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Asia has no effect on the direction of MAYBANK EMERGING i.e., MAYBANK EMERGING and First Trust go up and down completely randomly.
Pair Corralation between MAYBANK EMERGING and First Trust
Considering the 90-day investment horizon MAYBANK EMERGING is expected to generate 1.2 times less return on investment than First Trust. But when comparing it to its historical volatility, MAYBANK EMERGING ETF is 1.42 times less risky than First Trust. It trades about 0.04 of its potential returns per unit of risk. First Trust Asia is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,533 in First Trust Asia on August 31, 2024 and sell it today you would earn a total of 429.00 from holding First Trust Asia or generate 16.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.74% |
| Values | Daily Returns |
MAYBANK EMERGING ETF vs. First Trust Asia
Performance |
| Timeline |
| MAYBANK EMERGING ETF |
| First Trust Asia |
MAYBANK EMERGING and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAYBANK EMERGING and First Trust
The main advantage of trading using opposite MAYBANK EMERGING and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAYBANK EMERGING position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| MAYBANK EMERGING vs. Xtrackers MSCI Emerging | MAYBANK EMERGING vs. FlexShares Morningstar Emerging | MAYBANK EMERGING vs. First Trust Emerging |
| First Trust vs. iShares MSCI ACWI | First Trust vs. iShares MSCI ACWI | First Trust vs. iShares MSCI BIC | First Trust vs. iShares Asia 50 |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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