Correlation Between Maryland Tax-free and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both Maryland Tax-free 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 Maryland Tax-free and Ashmore Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maryland Tax Free Bond and Ashmore Emerging Markets, you can compare the effects of market volatilities on Maryland Tax-free 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 Maryland Tax-free with a short position of Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maryland Tax-free and Ashmore Emerging.
Diversification Opportunities for Maryland Tax-free and Ashmore Emerging
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Maryland and Ashmore is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Maryland Tax Free Bond 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 Maryland Tax-free 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 Maryland Tax Free Bond 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 Maryland Tax-free i.e., Maryland Tax-free and Ashmore Emerging go up and down completely randomly.
Pair Corralation between Maryland Tax-free and Ashmore Emerging
Assuming the 90 days horizon Maryland Tax-free is expected to generate 1.3 times less return on investment than Ashmore Emerging. But when comparing it to its historical volatility, Maryland Tax Free Bond is 1.93 times less risky than Ashmore Emerging. It trades about 0.08 of its potential returns per unit of risk. Ashmore Emerging Markets is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 582.00 in Ashmore Emerging Markets on August 30, 2024 and sell it today you would earn a total of 71.00 from holding Ashmore Emerging Markets or generate 12.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maryland Tax Free Bond vs. Ashmore Emerging Markets
Performance |
| Timeline |
| Maryland Tax Free |
| Ashmore Emerging Markets |
Maryland Tax-free and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maryland Tax-free and Ashmore Emerging
The main advantage of trading using opposite Maryland Tax-free and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maryland Tax-free 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.| Maryland Tax-free vs. Maryland Tax Free Bond | Maryland Tax-free vs. HUMANA INC | Maryland Tax-free vs. Aquagold International | Maryland Tax-free vs. Barloworld Ltd ADR |
| Ashmore Emerging vs. Nuveen Massachusetts Municipal | Ashmore Emerging vs. Mirova Global Green | Ashmore Emerging vs. Maryland Tax Free Bond | Ashmore Emerging vs. Sterling Capital Short |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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