Correlation Between Emerging Markets and Northern Large
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Northern Large 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 Emerging Markets and Northern Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Portfolio and Northern Large Cap, you can compare the effects of market volatilities on Emerging Markets and Northern Large 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 Emerging Markets with a short position of Northern Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Northern Large.
Diversification Opportunities for Emerging Markets and Northern Large
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Emerging and Northern is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Portfolio and Northern Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Large Cap and Emerging Markets 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 Emerging Markets Portfolio are associated (or correlated) with Northern Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Large Cap has no effect on the direction of Emerging Markets i.e., Emerging Markets and Northern Large go up and down completely randomly.
Pair Corralation between Emerging Markets and Northern Large
Assuming the 90 days horizon Emerging Markets is expected to generate 1.63 times less return on investment than Northern Large. In addition to that, Emerging Markets is 1.14 times more volatile than Northern Large Cap. It trades about 0.05 of its total potential returns per unit of risk. Northern Large Cap is currently generating about 0.09 per unit of volatility. If you would invest 1,868 in Northern Large Cap on August 26, 2024 and sell it today you would earn a total of 450.00 from holding Northern Large Cap or generate 24.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerging Markets Portfolio vs. Northern Large Cap
Performance |
| Timeline |
| Emerging Markets Por |
| Northern Large Cap |
Emerging Markets and Northern Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Northern Large
The main advantage of trading using opposite Emerging Markets and Northern Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Northern Large 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 Northern Large will offset losses from the drop in Northern Large's long position.| Emerging Markets vs. Emerging Markets Equity | Emerging Markets vs. Global Fixed Income | Emerging Markets vs. Global Fixed Income | Emerging Markets vs. Global Fixed Income |
| Northern Large vs. Origin Emerging Markets | Northern Large vs. Pace International Emerging | Northern Large vs. Ab All Market | Northern Large vs. Shelton Emerging Markets |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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