Correlation Between Ab Small and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Ab Small 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 Ab Small and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Small Cap and Emerging Markets Fund, you can compare the effects of market volatilities on Ab Small 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 Ab Small with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Emerging Markets.
Diversification Opportunities for Ab Small and Emerging Markets
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between QUAIX and Emerging is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and Ab Small 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 Ab Small Cap 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 has no effect on the direction of Ab Small i.e., Ab Small and Emerging Markets go up and down completely randomly.
Pair Corralation between Ab Small and Emerging Markets
Assuming the 90 days horizon Ab Small Cap is expected to generate 1.51 times more return on investment than Emerging Markets. However, Ab Small is 1.51 times more volatile than Emerging Markets Fund. It trades about 0.04 of its potential returns per unit of risk. Emerging Markets Fund is currently generating about 0.05 per unit of risk. If you would invest 5,648 in Ab Small Cap on November 27, 2024 and sell it today you would earn a total of 1,326 from holding Ab Small Cap or generate 23.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Small Cap vs. Emerging Markets Fund
Performance |
| Timeline |
| Ab Small Cap |
| Emerging Markets |
Ab Small and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Small and Emerging Markets
The main advantage of trading using opposite Ab Small and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small 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.| Ab Small vs. Harbor Diversified International | Ab Small vs. Diversified Bond Fund | Ab Small vs. Blackrock Diversified Fixed | Ab Small vs. Western Asset Diversified |
| Emerging Markets vs. Rbc Bluebay Emerging | Emerging Markets vs. Ultra Short Fixed Income | Emerging Markets vs. Baird Quality Intermediate | Emerging Markets vs. Artisan High Income |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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