Correlation Between New World and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both New World 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 New World and Ashmore Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New World Fund and Ashmore Emerging Markets, you can compare the effects of market volatilities on New World 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 New World with a short position of Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of New World and Ashmore Emerging.
Diversification Opportunities for New World and Ashmore Emerging
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between New and Ashmore is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding New World Fund 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 New World 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 New World Fund 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 New World i.e., New World and Ashmore Emerging go up and down completely randomly.
Pair Corralation between New World and Ashmore Emerging
If you would invest 7,515 in New World Fund on November 3, 2024 and sell it today you would earn a total of 441.00 from holding New World Fund or generate 5.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 0.4% |
| Values | Daily Returns |
New World Fund vs. Ashmore Emerging Markets
Performance |
| Timeline |
| New World Fund |
| Ashmore Emerging Markets |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
New World and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New World and Ashmore Emerging
The main advantage of trading using opposite New World and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New World 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.| New World vs. Smallcap World Fund | New World vs. Capital World Growth | New World vs. American Funds Fundamental | New World vs. Capital Income Builder |
| Ashmore Emerging vs. Chestnut Street Exchange | Ashmore Emerging vs. Financials Ultrasector Profund | Ashmore Emerging vs. Ab Government Exchange | Ashmore Emerging vs. John Hancock Money |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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