Correlation Between Origin Emerging and Applied Finance
Can any of the company-specific risk be diversified away by investing in both Origin Emerging and Applied Finance 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 Origin Emerging and Applied Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Emerging Markets and Applied Finance Core, you can compare the effects of market volatilities on Origin Emerging and Applied Finance 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 Origin Emerging with a short position of Applied Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Emerging and Applied Finance.
Diversification Opportunities for Origin Emerging and Applied Finance
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Origin and Applied is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Origin Emerging Markets and Applied Finance Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Finance Core and Origin Emerging 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 Origin Emerging Markets are associated (or correlated) with Applied Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Finance Core has no effect on the direction of Origin Emerging i.e., Origin Emerging and Applied Finance go up and down completely randomly.
Pair Corralation between Origin Emerging and Applied Finance
Assuming the 90 days horizon Origin Emerging Markets is expected to generate 1.13 times more return on investment than Applied Finance. However, Origin Emerging is 1.13 times more volatile than Applied Finance Core. It trades about 0.18 of its potential returns per unit of risk. Applied Finance Core is currently generating about -0.09 per unit of risk. If you would invest 1,026 in Origin Emerging Markets on September 13, 2024 and sell it today you would earn a total of 26.00 from holding Origin Emerging Markets or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Origin Emerging Markets vs. Applied Finance Core
Performance |
| Timeline |
| Origin Emerging Markets |
| Applied Finance Core |
Origin Emerging and Applied Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Emerging and Applied Finance
The main advantage of trading using opposite Origin Emerging and Applied Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Emerging position performs unexpectedly, Applied Finance 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 Applied Finance will offset losses from the drop in Applied Finance's long position.| Origin Emerging vs. Western Asset Diversified | Origin Emerging vs. Ep Emerging Markets | Origin Emerging vs. Ab All Market | Origin Emerging vs. Rbc Emerging Markets |
| Applied Finance vs. Applied Finance Core | Applied Finance vs. Applied Finance Explorer | Applied Finance vs. Applied Finance Explorer | Applied Finance vs. Applied Finance Select |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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