Correlation Between Extended Market and Investec Emerging
Can any of the company-specific risk be diversified away by investing in both Extended Market and Investec 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 Extended Market and Investec Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Extended Market Index and Investec Emerging Markets, you can compare the effects of market volatilities on Extended Market and Investec 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 Extended Market with a short position of Investec Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extended Market and Investec Emerging.
Diversification Opportunities for Extended Market and Investec Emerging
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Extended and Investec is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Extended Market Index and Investec Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Emerging Markets and Extended Market 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 Extended Market Index are associated (or correlated) with Investec Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Emerging Markets has no effect on the direction of Extended Market i.e., Extended Market and Investec Emerging go up and down completely randomly.
Pair Corralation between Extended Market and Investec Emerging
Assuming the 90 days horizon Extended Market Index is expected to under-perform the Investec Emerging. In addition to that, Extended Market is 1.82 times more volatile than Investec Emerging Markets. It trades about -0.04 of its total potential returns per unit of risk. Investec Emerging Markets is currently generating about -0.03 per unit of volatility. If you would invest 1,103 in Investec Emerging Markets on October 31, 2024 and sell it today you would lose (26.00) from holding Investec Emerging Markets or give up 2.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extended Market Index vs. Investec Emerging Markets
Performance |
| Timeline |
| Extended Market Index |
| Investec Emerging Markets |
Extended Market and Investec Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extended Market and Investec Emerging
The main advantage of trading using opposite Extended Market and Investec Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extended Market position performs unexpectedly, Investec 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 Investec Emerging will offset losses from the drop in Investec Emerging's long position.| Extended Market vs. Tiaa Cref Inflation Link | Extended Market vs. Ab Bond Inflation | Extended Market vs. Guidepath Managed Futures | Extended Market vs. Guggenheim Managed Futures |
| Investec Emerging vs. Qs Global Equity | Investec Emerging vs. Artisan Select Equity | Investec Emerging vs. T Rowe Price | Investec Emerging vs. Old Westbury Fixed |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |