Correlation Between Emerging Markets and Mesirow Financial
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Mesirow Financial 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 Emerging Markets and Mesirow Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Equity and Mesirow Financial Small, you can compare the effects of market volatilities on Emerging Markets and Mesirow Financial 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 Emerging Markets with a short position of Mesirow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Mesirow Financial.
Diversification Opportunities for Emerging Markets and Mesirow Financial
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Emerging and Mesirow is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Equity and Mesirow Financial Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesirow Financial Small and Emerging Markets 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 Emerging Markets Equity are associated (or correlated) with Mesirow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesirow Financial Small has no effect on the direction of Emerging Markets i.e., Emerging Markets and Mesirow Financial go up and down completely randomly.
Pair Corralation between Emerging Markets and Mesirow Financial
Assuming the 90 days horizon Emerging Markets Equity is expected to generate 0.63 times more return on investment than Mesirow Financial. However, Emerging Markets Equity is 1.59 times less risky than Mesirow Financial. It trades about 0.03 of its potential returns per unit of risk. Mesirow Financial Small is currently generating about 0.0 per unit of risk. If you would invest 1,346 in Emerging Markets Equity on November 2, 2024 and sell it today you would earn a total of 31.00 from holding Emerging Markets Equity or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.04% |
| Values | Daily Returns |
Emerging Markets Equity vs. Mesirow Financial Small
Performance |
| Timeline |
| Emerging Markets Equity |
| Mesirow Financial Small |
Emerging Markets and Mesirow Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Mesirow Financial
The main advantage of trading using opposite Emerging Markets and Mesirow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Mesirow Financial 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 Mesirow Financial will offset losses from the drop in Mesirow Financial's long position.| Emerging Markets vs. Hsbc Treasury Money | Emerging Markets vs. Blackrock Exchange Portfolio | Emerging Markets vs. Cref Money Market | Emerging Markets vs. Chestnut Street Exchange |
| Mesirow Financial vs. Mesirow Financial Small | Mesirow Financial vs. Mesirow Enhanced Core | Mesirow Financial vs. Mesirow Financial High | Mesirow Financial vs. Mesirow Financial 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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