Correlation Between Us Government and Origin Emerging
Can any of the company-specific risk be diversified away by investing in both Us Government and Origin 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 Us Government and Origin Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Government Securities and Origin Emerging Markets, you can compare the effects of market volatilities on Us Government and Origin 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 Us Government with a short position of Origin Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Origin Emerging.
Diversification Opportunities for Us Government and Origin Emerging
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UGSDX and Origin is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities and Origin Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Emerging Markets and Us Government 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 Us Government Securities are associated (or correlated) with Origin Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Emerging Markets has no effect on the direction of Us Government i.e., Us Government and Origin Emerging go up and down completely randomly.
Pair Corralation between Us Government and Origin Emerging
Assuming the 90 days horizon Us Government Securities is expected to generate 2.57 times more return on investment than Origin Emerging. However, Us Government is 2.57 times more volatile than Origin Emerging Markets. It trades about 0.24 of its potential returns per unit of risk. Origin Emerging Markets is currently generating about -0.15 per unit of risk. If you would invest 194.00 in Us Government Securities on October 25, 2024 and sell it today you would earn a total of 1.00 from holding Us Government Securities or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 72.22% |
| Values | Daily Returns |
Us Government Securities vs. Origin Emerging Markets
Performance |
| Timeline |
| Us Government Securities |
| Origin Emerging Markets |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Us Government and Origin Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and Origin Emerging
The main advantage of trading using opposite Us Government and Origin Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government position performs unexpectedly, Origin 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 Origin Emerging will offset losses from the drop in Origin Emerging's long position.| Us Government vs. Putnam Money Market | Us Government vs. Pioneer Money Market | Us Government vs. Elfun Government Money | Us Government vs. Cref Money Market |
| Origin Emerging vs. Payden Government Fund | Origin Emerging vs. Us Government Securities | Origin Emerging vs. Intermediate Government Bond | Origin Emerging vs. Franklin Adjustable Government |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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