Correlation Between Origin Emerging and Wcm China
Can any of the company-specific risk be diversified away by investing in both Origin Emerging and Wcm China 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 Wcm China 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 Wcm China Quality, you can compare the effects of market volatilities on Origin Emerging and Wcm China 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 Wcm China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Emerging and Wcm China.
Diversification Opportunities for Origin Emerging and Wcm China
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Origin and Wcm is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Origin Emerging Markets and Wcm China Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wcm China Quality 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 Wcm China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wcm China Quality has no effect on the direction of Origin Emerging i.e., Origin Emerging and Wcm China go up and down completely randomly.
Pair Corralation between Origin Emerging and Wcm China
Assuming the 90 days horizon Origin Emerging Markets is expected to generate 0.42 times more return on investment than Wcm China. However, Origin Emerging Markets is 2.4 times less risky than Wcm China. It trades about 0.12 of its potential returns per unit of risk. Wcm China Quality is currently generating about -0.01 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 17.00 from holding Origin Emerging Markets or generate 1.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Origin Emerging Markets vs. Wcm China Quality
Performance |
| Timeline |
| Origin Emerging Markets |
| Wcm China Quality |
Origin Emerging and Wcm China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Emerging and Wcm China
The main advantage of trading using opposite Origin Emerging and Wcm China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Emerging position performs unexpectedly, Wcm China 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 Wcm China will offset losses from the drop in Wcm China's long position.| Origin Emerging vs. Virtus High Yield | Origin Emerging vs. Voya High Yield | Origin Emerging vs. Fidelity Capital Income | Origin Emerging vs. Gmo High Yield |
| Wcm China vs. Investment Managers Series | Wcm China vs. Wcm Focused International | Wcm China vs. Wcm Focused International | Wcm China vs. Wcm Small Cap |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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