Correlation Between Global Real and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both Global Real and Ashmore Emerging 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 Global Real and Ashmore Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Real Estate and Ashmore Emerging Markets, you can compare the effects of market volatilities on Global Real and Ashmore Emerging 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 Global Real with a short position of Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Real and Ashmore Emerging.
Diversification Opportunities for Global Real and Ashmore Emerging
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Ashmore is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Global Real Estate and Ashmore Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Emerging Markets and Global Real 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 Global Real Estate are associated (or correlated) with Ashmore Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Emerging Markets has no effect on the direction of Global Real i.e., Global Real and Ashmore Emerging go up and down completely randomly.
Pair Corralation between Global Real and Ashmore Emerging
Assuming the 90 days horizon Global Real Estate is expected to generate 2.95 times more return on investment than Ashmore Emerging. However, Global Real is 2.95 times more volatile than Ashmore Emerging Markets. It trades about 0.12 of its potential returns per unit of risk. Ashmore Emerging Markets is currently generating about 0.16 per unit of risk. If you would invest 2,859 in Global Real Estate on November 3, 2024 and sell it today you would earn a total of 67.00 from holding Global Real Estate or generate 2.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Real Estate vs. Ashmore Emerging Markets
Performance |
| Timeline |
| Global Real Estate |
| Ashmore Emerging Markets |
Global Real and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Real and Ashmore Emerging
The main advantage of trading using opposite Global Real and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Real position performs unexpectedly, Ashmore Emerging 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 Ashmore Emerging will offset losses from the drop in Ashmore Emerging's long position.| Global Real vs. Vanguard Energy Index | Global Real vs. Tortoise Energy Independence | Global Real vs. Clearbridge Energy Mlp | Global Real vs. Oil Gas Ultrasector |
| Ashmore Emerging vs. Specialized Technology Fund | Ashmore Emerging vs. Vanguard Information Technology | Ashmore Emerging vs. Blackrock Science Technology | Ashmore Emerging vs. Allianzgi Technology Fund |
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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