Correlation Between Short Precious and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Short Precious 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 Short Precious and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Precious Metals and The Emerging Markets, you can compare the effects of market volatilities on Short Precious 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 Short Precious with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Precious and Emerging Markets.
Diversification Opportunities for Short Precious and Emerging Markets
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Short and Emerging is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Short Precious Metals and The Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and Short Precious 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 Short Precious Metals 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 has no effect on the direction of Short Precious i.e., Short Precious and Emerging Markets go up and down completely randomly.
Pair Corralation between Short Precious and Emerging Markets
Assuming the 90 days horizon Short Precious Metals is expected to under-perform the Emerging Markets. In addition to that, Short Precious is 1.48 times more volatile than The Emerging Markets. It trades about -0.34 of its total potential returns per unit of risk. The Emerging Markets is currently generating about 0.09 per unit of volatility. If you would invest 1,974 in The Emerging Markets on November 4, 2024 and sell it today you would earn a total of 34.00 from holding The Emerging Markets or generate 1.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Precious Metals vs. The Emerging Markets
Performance |
| Timeline |
| Short Precious Metals |
| Emerging Markets |
Short Precious and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short Precious and Emerging Markets
The main advantage of trading using opposite Short Precious and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Precious 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.| Short Precious vs. Small Cap Value Profund | Short Precious vs. American Century Etf | Short Precious vs. Victory Rs Partners | Short Precious vs. Ultrasmall Cap Profund Ultrasmall Cap |
| Emerging Markets vs. Federated Emerging Market | Emerging Markets vs. Dodge Cox Emerging | Emerging Markets vs. Mid Cap 15x Strategy | Emerging Markets vs. Siit Emerging Markets |
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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