Correlation Between Dow 2x and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both Dow 2x 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 Dow 2x and Ashmore Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow 2x Strategy and Ashmore Emerging Markets, you can compare the effects of market volatilities on Dow 2x 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 Dow 2x with a short position of Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow 2x and Ashmore Emerging.
Diversification Opportunities for Dow 2x and Ashmore Emerging
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Ashmore is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dow 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 Dow 2x 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 Dow 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 Dow 2x i.e., Dow 2x and Ashmore Emerging go up and down completely randomly.
Pair Corralation between Dow 2x and Ashmore Emerging
Assuming the 90 days horizon Dow 2x Strategy is expected to generate 4.88 times more return on investment than Ashmore Emerging. However, Dow 2x is 4.88 times more volatile than Ashmore Emerging Markets. It trades about 0.16 of its potential returns per unit of risk. Ashmore Emerging Markets is currently generating about -0.04 per unit of risk. If you would invest 16,643 in Dow 2x Strategy on October 20, 2024 and sell it today you would earn a total of 791.00 from holding Dow 2x Strategy or generate 4.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow 2x Strategy vs. Ashmore Emerging Markets
Performance |
| Timeline |
| Dow 2x Strategy |
| Ashmore Emerging Markets |
Dow 2x and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dow 2x and Ashmore Emerging
The main advantage of trading using opposite Dow 2x and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow 2x 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.| Dow 2x vs. Sp 500 2x | Dow 2x vs. Inverse Dow 2x | Dow 2x vs. Nasdaq 100 2x Strategy | Dow 2x vs. Russell 2000 2x |
| Ashmore Emerging vs. Us Vector Equity | Ashmore Emerging vs. Dreyfusstandish Global Fixed | Ashmore Emerging vs. T Rowe Price | Ashmore Emerging vs. Aqr Long Short Equity |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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