Correlation Between Energy Basic and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Energy Basic 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 Energy Basic and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Basic Materials and Emerging Markets Leaders, you can compare the effects of market volatilities on Energy Basic 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 Energy Basic with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Basic and Emerging Markets.
Diversification Opportunities for Energy Basic and Emerging Markets
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Energy and Emerging is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Energy Basic Materials and Emerging Markets Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Leaders and Energy Basic 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 Energy Basic Materials 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 Leaders has no effect on the direction of Energy Basic i.e., Energy Basic and Emerging Markets go up and down completely randomly.
Pair Corralation between Energy Basic and Emerging Markets
If you would invest 2,240 in Emerging Markets Leaders on September 14, 2024 and sell it today you would earn a total of 0.00 from holding Emerging Markets Leaders or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Energy Basic Materials vs. Emerging Markets Leaders
Performance |
| Timeline |
| Energy Basic Materials |
| Emerging Markets Leaders |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Energy Basic and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Basic and Emerging Markets
The main advantage of trading using opposite Energy Basic and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Basic 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.| Energy Basic vs. Chestnut Street Exchange | Energy Basic vs. The Gabelli Money | Energy Basic vs. Blackrock Exchange Portfolio | Energy Basic vs. Edward Jones Money |
| Emerging Markets vs. Jennison Natural Resources | Emerging Markets vs. Calvert Global Energy | Emerging Markets vs. Energy Basic Materials | Emerging Markets vs. Firsthand Alternative Energy |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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