Correlation Between Research Affiliates and EMCS
Can any of the company-specific risk be diversified away by investing in both Research Affiliates and EMCS 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 Research Affiliates and EMCS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Research Affiliates Deletions and EMCS, you can compare the effects of market volatilities on Research Affiliates and EMCS 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 Research Affiliates with a short position of EMCS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Research Affiliates and EMCS.
Diversification Opportunities for Research Affiliates and EMCS
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Research and EMCS is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Research Affiliates Deletions and EMCS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCS and Research Affiliates 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 Research Affiliates Deletions are associated (or correlated) with EMCS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCS has no effect on the direction of Research Affiliates i.e., Research Affiliates and EMCS go up and down completely randomly.
Pair Corralation between Research Affiliates and EMCS
Given the investment horizon of 90 days Research Affiliates Deletions is expected to generate 1.1 times more return on investment than EMCS. However, Research Affiliates is 1.1 times more volatile than EMCS. It trades about 0.16 of its potential returns per unit of risk. EMCS is currently generating about 0.04 per unit of risk. If you would invest 2,477 in Research Affiliates Deletions on August 26, 2024 and sell it today you would earn a total of 252.00 from holding Research Affiliates Deletions or generate 10.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 13.96% |
| Values | Daily Returns |
Research Affiliates Deletions vs. EMCS
Performance |
| Timeline |
| Research Affiliates |
| EMCS |
Research Affiliates and EMCS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Research Affiliates and EMCS
The main advantage of trading using opposite Research Affiliates and EMCS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Research Affiliates position performs unexpectedly, EMCS 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 EMCS will offset losses from the drop in EMCS's long position.| Research Affiliates vs. Cambria Micro And | Research Affiliates vs. Invesco Actively Managed | Research Affiliates vs. iShares Trust | Research Affiliates vs. EMCS |
| EMCS vs. Invesco PureBeta MSCI | EMCS vs. Aquagold International | EMCS vs. Morningstar Unconstrained Allocation | EMCS vs. High Yield Municipal Fund |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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