Correlation Between Select Fund and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Select Fund 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 Select Fund and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Fund I and Emerging Markets Debt, you can compare the effects of market volatilities on Select Fund 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 Select Fund with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Fund and Emerging Markets.
Diversification Opportunities for Select Fund and Emerging Markets
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Select and Emerging is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Select Fund I and Emerging Markets Debt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Debt and Select Fund 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 Select Fund I 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 Debt has no effect on the direction of Select Fund i.e., Select Fund and Emerging Markets go up and down completely randomly.
Pair Corralation between Select Fund and Emerging Markets
Assuming the 90 days horizon Select Fund I is expected to generate 3.79 times more return on investment than Emerging Markets. However, Select Fund is 3.79 times more volatile than Emerging Markets Debt. It trades about 0.09 of its potential returns per unit of risk. Emerging Markets Debt is currently generating about 0.05 per unit of risk. If you would invest 10,878 in Select Fund I on September 12, 2024 and sell it today you would earn a total of 2,615 from holding Select Fund I or generate 24.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Select Fund I vs. Emerging Markets Debt
Performance |
| Timeline |
| Select Fund I |
| Emerging Markets Debt |
Select Fund and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Fund and Emerging Markets
The main advantage of trading using opposite Select Fund and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Fund 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.| Select Fund vs. Ultra Fund I | Select Fund vs. International Growth Fund | Select Fund vs. Ultra Fund A | Select Fund vs. Value Fund I |
| Emerging Markets vs. Emerging Markets Fund | Emerging Markets vs. Emerging Markets Fund | Emerging Markets vs. Emerging Markets Fund | Emerging Markets vs. Emerging Markets Fund |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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