Correlation Between Nasdaq-100(r) and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) 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 Nasdaq-100(r) and Ashmore Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Ashmore Emerging Markets, you can compare the effects of market volatilities on Nasdaq-100(r) 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 Nasdaq-100(r) with a short position of Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Ashmore Emerging.
Diversification Opportunities for Nasdaq-100(r) and Ashmore Emerging
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasdaq-100(r) and Ashmore is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy 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 Nasdaq-100(r) 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 Nasdaq 100 2x Strategy 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 Nasdaq-100(r) i.e., Nasdaq-100(r) and Ashmore Emerging go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Ashmore Emerging
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 6.81 times more return on investment than Ashmore Emerging. However, Nasdaq-100(r) is 6.81 times more volatile than Ashmore Emerging Markets. It trades about 0.04 of its potential returns per unit of risk. Ashmore Emerging Markets is currently generating about -0.05 per unit of risk. If you would invest 37,927 in Nasdaq 100 2x Strategy on November 1, 2024 and sell it today you would earn a total of 1,920 from holding Nasdaq 100 2x Strategy or generate 5.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Ashmore Emerging Markets
Performance |
| Timeline |
| Nasdaq 100 2x |
| Ashmore Emerging Markets |
Nasdaq-100(r) and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Ashmore Emerging
The main advantage of trading using opposite Nasdaq-100(r) and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) 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.| Nasdaq-100(r) vs. Goldman Sachs Strategic | Nasdaq-100(r) vs. Global Gold Fund | Nasdaq-100(r) vs. Fidelity Advisor Gold | Nasdaq-100(r) vs. James Balanced Golden |
| Ashmore Emerging vs. Ab High Income | Ashmore Emerging vs. Aqr Risk Parity | Ashmore Emerging vs. Pace High Yield | Ashmore Emerging vs. Metropolitan West High |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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