Correlation Between Banking Fund and Inverse Emerging
Can any of the company-specific risk be diversified away by investing in both Banking Fund and Inverse 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 Banking Fund and Inverse Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banking Fund Class and Inverse Emerging Markets, you can compare the effects of market volatilities on Banking Fund and Inverse 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 Banking Fund with a short position of Inverse Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banking Fund and Inverse Emerging.
Diversification Opportunities for Banking Fund and Inverse Emerging
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Banking and Inverse is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Banking Fund Class and Inverse Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Emerging Markets and Banking Fund 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 Banking Fund Class are associated (or correlated) with Inverse Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Emerging Markets has no effect on the direction of Banking Fund i.e., Banking Fund and Inverse Emerging go up and down completely randomly.
Pair Corralation between Banking Fund and Inverse Emerging
Assuming the 90 days horizon Banking Fund Class is expected to generate 0.66 times more return on investment than Inverse Emerging. However, Banking Fund Class is 1.52 times less risky than Inverse Emerging. It trades about 0.04 of its potential returns per unit of risk. Inverse Emerging Markets is currently generating about -0.03 per unit of risk. If you would invest 7,226 in Banking Fund Class on September 14, 2024 and sell it today you would earn a total of 2,144 from holding Banking Fund Class or generate 29.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banking Fund Class vs. Inverse Emerging Markets
Performance |
| Timeline |
| Banking Fund Class |
| Inverse Emerging Markets |
Banking Fund and Inverse Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banking Fund and Inverse Emerging
The main advantage of trading using opposite Banking Fund and Inverse Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banking Fund position performs unexpectedly, Inverse 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 Inverse Emerging will offset losses from the drop in Inverse Emerging's long position.| Banking Fund vs. Short Precious Metals | Banking Fund vs. James Balanced Golden | Banking Fund vs. International Investors Gold | Banking Fund vs. Gabelli Gold Fund |
| Inverse Emerging vs. Basic Materials Fund | Inverse Emerging vs. Basic Materials Fund | Inverse Emerging vs. Banking Fund Class | Inverse Emerging vs. Basic Materials 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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