Correlation Between Global Strategist and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Global Strategist and Emerging Markets 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 Global Strategist and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Strategist Portfolio and Emerging Markets Equity, you can compare the effects of market volatilities on Global Strategist and Emerging Markets 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 Global Strategist with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Strategist and Emerging Markets.
Diversification Opportunities for Global Strategist and Emerging Markets
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Emerging is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Global Strategist Portfolio and Emerging Markets Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Equity and Global Strategist 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 Global Strategist Portfolio are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Equity has no effect on the direction of Global Strategist i.e., Global Strategist and Emerging Markets go up and down completely randomly.
Pair Corralation between Global Strategist and Emerging Markets
Assuming the 90 days horizon Global Strategist Portfolio is expected to generate 0.52 times more return on investment than Emerging Markets. However, Global Strategist Portfolio is 1.93 times less risky than Emerging Markets. It trades about 0.12 of its potential returns per unit of risk. Emerging Markets Equity is currently generating about 0.05 per unit of risk. If you would invest 1,624 in Global Strategist Portfolio on September 3, 2024 and sell it today you would earn a total of 244.00 from holding Global Strategist Portfolio or generate 15.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Strategist Portfolio vs. Emerging Markets Equity
Performance |
| Timeline |
| Global Strategist |
| Emerging Markets Equity |
Global Strategist and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Strategist and Emerging Markets
The main advantage of trading using opposite Global Strategist and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Strategist position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Global Strategist vs. Harbor Capital Appreciation | Global Strategist vs. Icm Small Pany | Global Strategist vs. Europacific Growth Fund | Global Strategist vs. Total Return Fund |
| Emerging Markets vs. Morningstar Global Income | Emerging Markets vs. Artisan Global Unconstrained | Emerging Markets vs. Franklin Mutual Global | Emerging Markets vs. Ab Global Real |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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