Correlation Between Origin Emerging and Federated Government
Can any of the company-specific risk be diversified away by investing in both Origin Emerging and Federated Government 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 Federated Government 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 Federated Government Ultrashort, you can compare the effects of market volatilities on Origin Emerging and Federated Government 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 Federated Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Emerging and Federated Government.
Diversification Opportunities for Origin Emerging and Federated Government
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Origin and Federated is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Origin Emerging Markets and Federated Government Ultrashor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Government 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 Federated Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Government has no effect on the direction of Origin Emerging i.e., Origin Emerging and Federated Government go up and down completely randomly.
Pair Corralation between Origin Emerging and Federated Government
Assuming the 90 days horizon Origin Emerging Markets is expected to generate 8.94 times more return on investment than Federated Government. However, Origin Emerging is 8.94 times more volatile than Federated Government Ultrashort. It trades about 0.06 of its potential returns per unit of risk. Federated Government Ultrashort is currently generating about 0.2 per unit of risk. If you would invest 915.00 in Origin Emerging Markets on September 14, 2024 and sell it today you would earn a total of 137.00 from holding Origin Emerging Markets or generate 14.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Origin Emerging Markets vs. Federated Government Ultrashor
Performance |
| Timeline |
| Origin Emerging Markets |
| Federated Government |
Origin Emerging and Federated Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Emerging and Federated Government
The main advantage of trading using opposite Origin Emerging and Federated Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Emerging position performs unexpectedly, Federated Government 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 Federated Government will offset losses from the drop in Federated Government'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 |
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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