Correlation Between Commodityrealreturn and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Commodityrealreturn 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 Commodityrealreturn and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commodityrealreturn Strategy Fund and Emerging Markets Bond, you can compare the effects of market volatilities on Commodityrealreturn 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 Commodityrealreturn with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commodityrealreturn and Emerging Markets.
Diversification Opportunities for Commodityrealreturn and Emerging Markets
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Commodityrealreturn and Emerging is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Commodityrealreturn Strategy F and Emerging Markets Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Bond and Commodityrealreturn 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 Commodityrealreturn Strategy Fund 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 Bond has no effect on the direction of Commodityrealreturn i.e., Commodityrealreturn and Emerging Markets go up and down completely randomly.
Pair Corralation between Commodityrealreturn and Emerging Markets
Assuming the 90 days horizon Commodityrealreturn Strategy Fund is expected to generate 24.71 times more return on investment than Emerging Markets. However, Commodityrealreturn is 24.71 times more volatile than Emerging Markets Bond. It trades about 0.03 of its potential returns per unit of risk. Emerging Markets Bond is currently generating about 0.1 per unit of risk. If you would invest 1,160 in Commodityrealreturn Strategy Fund on September 2, 2024 and sell it today you would earn a total of 149.00 from holding Commodityrealreturn Strategy Fund or generate 12.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commodityrealreturn Strategy F vs. Emerging Markets Bond
Performance |
| Timeline |
| Commodityrealreturn |
| Emerging Markets Bond |
Commodityrealreturn and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commodityrealreturn and Emerging Markets
The main advantage of trading using opposite Commodityrealreturn and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commodityrealreturn 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.| Commodityrealreturn vs. Mfs Emerging Markets | Commodityrealreturn vs. Low Duration Fund | Commodityrealreturn vs. Emerging Markets Bond | Commodityrealreturn vs. All Asset Fund |
| Emerging Markets vs. Pimco Rae Worldwide | Emerging Markets vs. Pimco Rae Worldwide | Emerging Markets vs. Pimco Rae Worldwide | Emerging Markets vs. Pimco Rae Worldwide |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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