Correlation Between Asia Opportunity and Global Core
Can any of the company-specific risk be diversified away by investing in both Asia Opportunity and Global Core 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 Asia Opportunity and Global Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Opportunity Portfolio and Global E Portfolio, you can compare the effects of market volatilities on Asia Opportunity and Global Core 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 Asia Opportunity with a short position of Global Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Opportunity and Global Core.
Diversification Opportunities for Asia Opportunity and Global Core
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Asia and Global is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Asia Opportunity Portfolio and Global E Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Portfolio and Asia Opportunity 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 Asia Opportunity Portfolio are associated (or correlated) with Global Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Portfolio has no effect on the direction of Asia Opportunity i.e., Asia Opportunity and Global Core go up and down completely randomly.
Pair Corralation between Asia Opportunity and Global Core
Assuming the 90 days horizon Asia Opportunity Portfolio is expected to under-perform the Global Core. In addition to that, Asia Opportunity is 1.11 times more volatile than Global E Portfolio. It trades about -0.29 of its total potential returns per unit of risk. Global E Portfolio is currently generating about 0.06 per unit of volatility. If you would invest 2,105 in Global E Portfolio on October 22, 2024 and sell it today you would earn a total of 18.00 from holding Global E Portfolio or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Opportunity Portfolio vs. Global E Portfolio
Performance |
| Timeline |
| Asia Opportunity Por |
| Global E Portfolio |
Asia Opportunity and Global Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Opportunity and Global Core
The main advantage of trading using opposite Asia Opportunity and Global Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Opportunity position performs unexpectedly, Global Core 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 Global Core will offset losses from the drop in Global Core's long position.| Asia Opportunity vs. Pace Select Advisors | Asia Opportunity vs. Franklin Government Money | Asia Opportunity vs. Hsbc Treasury Money | Asia Opportunity vs. Bbh Trust |
| Global Core vs. Df Dent Small | Global Core vs. Needham Small Cap | Global Core vs. Smallcap Fund Fka | Global Core vs. Small Pany Growth |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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