Correlation Between Invesco Small and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both Invesco Small 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 Invesco Small and Ashmore Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Small Cap and Ashmore Emerging Markets, you can compare the effects of market volatilities on Invesco Small 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 Invesco Small with a short position of Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Small and Ashmore Emerging.
Diversification Opportunities for Invesco Small and Ashmore Emerging
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Invesco and Ashmore is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Small Cap 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 Invesco Small 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 Invesco Small Cap 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 Invesco Small i.e., Invesco Small and Ashmore Emerging go up and down completely randomly.
Pair Corralation between Invesco Small and Ashmore Emerging
Assuming the 90 days horizon Invesco Small Cap is expected to generate 1.2 times more return on investment than Ashmore Emerging. However, Invesco Small is 1.2 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 0.0 per unit of risk. If you would invest 1,406 in Invesco Small Cap on September 1, 2024 and sell it today you would earn a total of 300.00 from holding Invesco Small Cap or generate 21.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Small Cap vs. Ashmore Emerging Markets
Performance |
| Timeline |
| Invesco Small Cap |
| Ashmore Emerging Markets |
Invesco Small and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Small and Ashmore Emerging
The main advantage of trading using opposite Invesco Small and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Small 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.| Invesco Small vs. Qs Large Cap | Invesco Small vs. M Large Cap | Invesco Small vs. Legg Mason Bw | Invesco Small vs. American Mutual Fund |
| Ashmore Emerging vs. American Beacon The | Ashmore Emerging vs. Invesco Small Cap | Ashmore Emerging vs. Invesco Asia Pacific | Ashmore Emerging vs. Invesco European Growth |
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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