Correlation Between Emerging Markets and Value Fund
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Value Fund 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 Value Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Fund and Value Fund Investor, you can compare the effects of market volatilities on Emerging Markets and Value Fund 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 Value Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Value Fund.
Diversification Opportunities for Emerging Markets and Value Fund
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Emerging and Value is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Fund and Value Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Fund Investor 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 Fund are associated (or correlated) with Value Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Fund Investor has no effect on the direction of Emerging Markets i.e., Emerging Markets and Value Fund go up and down completely randomly.
Pair Corralation between Emerging Markets and Value Fund
Assuming the 90 days horizon Emerging Markets Fund is expected to under-perform the Value Fund. In addition to that, Emerging Markets is 1.28 times more volatile than Value Fund Investor. It trades about -0.15 of its total potential returns per unit of risk. Value Fund Investor is currently generating about 0.05 per unit of volatility. If you would invest 864.00 in Value Fund Investor on August 24, 2024 and sell it today you would earn a total of 6.00 from holding Value Fund Investor or generate 0.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerging Markets Fund vs. Value Fund Investor
Performance |
| Timeline |
| Emerging Markets |
| Value Fund Investor |
Emerging Markets and Value Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Value Fund
The main advantage of trading using opposite Emerging Markets and Value Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Value Fund 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 Value Fund will offset losses from the drop in Value Fund's long position.| Emerging Markets vs. Heritage Fund Investor | Emerging Markets vs. Real Estate Fund | Emerging Markets vs. Global Growth Fund | Emerging Markets vs. Utilities Fund Investor |
| Value Fund vs. International Growth Fund | Value Fund vs. Growth Fund Investor | Value Fund vs. Equity Income Fund | Value Fund vs. Ultra Fund Investor |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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