Correlation Between Investec Emerging and Applied Finance
Can any of the company-specific risk be diversified away by investing in both Investec Emerging and Applied Finance 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 Investec Emerging and Applied Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec Emerging Markets and Applied Finance Core, you can compare the effects of market volatilities on Investec Emerging and Applied Finance 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 Investec Emerging with a short position of Applied Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Emerging and Applied Finance.
Diversification Opportunities for Investec Emerging and Applied Finance
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Investec and Applied is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and Applied Finance Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Finance Core and Investec Emerging 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 Investec Emerging Markets are associated (or correlated) with Applied Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Finance Core has no effect on the direction of Investec Emerging i.e., Investec Emerging and Applied Finance go up and down completely randomly.
Pair Corralation between Investec Emerging and Applied Finance
Assuming the 90 days horizon Investec Emerging is expected to generate 1.55 times less return on investment than Applied Finance. In addition to that, Investec Emerging is 1.36 times more volatile than Applied Finance Core. It trades about 0.05 of its total potential returns per unit of risk. Applied Finance Core is currently generating about 0.11 per unit of volatility. If you would invest 1,171 in Applied Finance Core on September 12, 2024 and sell it today you would earn a total of 57.00 from holding Applied Finance Core or generate 4.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Investec Emerging Markets vs. Applied Finance Core
Performance |
| Timeline |
| Investec Emerging Markets |
| Applied Finance Core |
Investec Emerging and Applied Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec Emerging and Applied Finance
The main advantage of trading using opposite Investec Emerging and Applied Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging position performs unexpectedly, Applied Finance 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 Applied Finance will offset losses from the drop in Applied Finance's long position.| Investec Emerging vs. Origin Emerging Markets | Investec Emerging vs. Franklin Emerging Market | Investec Emerging vs. Barings Emerging Markets | Investec Emerging vs. Shelton Emerging Markets |
| Applied Finance vs. Qs Moderate Growth | Applied Finance vs. Blackrock Moderate Prepared | Applied Finance vs. Jpmorgan Smartretirement 2035 | Applied Finance vs. Sierra E Retirement |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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