Correlation Between Investec Emerging and Absolute Convertible
Can any of the company-specific risk be diversified away by investing in both Investec Emerging and Absolute Convertible 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 Absolute Convertible 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 Absolute Convertible Arbitrage, you can compare the effects of market volatilities on Investec Emerging and Absolute Convertible 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 Absolute Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Emerging and Absolute Convertible.
Diversification Opportunities for Investec Emerging and Absolute Convertible
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Investec and Absolute is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and Absolute Convertible Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Convertible 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 Absolute Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Convertible has no effect on the direction of Investec Emerging i.e., Investec Emerging and Absolute Convertible go up and down completely randomly.
Pair Corralation between Investec Emerging and Absolute Convertible
Assuming the 90 days horizon Investec Emerging Markets is expected to generate 10.46 times more return on investment than Absolute Convertible. However, Investec Emerging is 10.46 times more volatile than Absolute Convertible Arbitrage. It trades about 0.04 of its potential returns per unit of risk. Absolute Convertible Arbitrage is currently generating about 0.24 per unit of risk. If you would invest 909.00 in Investec Emerging Markets on November 6, 2024 and sell it today you would earn a total of 176.00 from holding Investec Emerging Markets or generate 19.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investec Emerging Markets vs. Absolute Convertible Arbitrage
Performance |
| Timeline |
| Investec Emerging Markets |
| Absolute Convertible |
Investec Emerging and Absolute Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec Emerging and Absolute Convertible
The main advantage of trading using opposite Investec Emerging and Absolute Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging position performs unexpectedly, Absolute Convertible 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 Absolute Convertible will offset losses from the drop in Absolute Convertible's long position.| Investec Emerging vs. Legg Mason Partners | Investec Emerging vs. United Kingdom Small | Investec Emerging vs. Rbc Small Cap | Investec Emerging vs. Jhvit International Small |
| Absolute Convertible vs. T Rowe Price | Absolute Convertible vs. Barings High Yield | Absolute Convertible vs. The Hartford High | Absolute Convertible vs. Rbc Bluebay Global |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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