Correlation Between Investec Emerging and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both Investec Emerging and Ashmore 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 Investec Emerging and Ashmore Emerging 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 Ashmore Emerging Markets, you can compare the effects of market volatilities on Investec Emerging and Ashmore 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 Investec Emerging with a short position of Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Emerging and Ashmore Emerging.
Diversification Opportunities for Investec Emerging and Ashmore Emerging
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Investec and Ashmore is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and Ashmore Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Emerging Markets 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 Ashmore Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Emerging Markets has no effect on the direction of Investec Emerging i.e., Investec Emerging and Ashmore Emerging go up and down completely randomly.
Pair Corralation between Investec Emerging and Ashmore Emerging
Assuming the 90 days horizon Investec Emerging Markets is expected to generate 2.94 times more return on investment than Ashmore Emerging. However, Investec Emerging is 2.94 times more volatile than Ashmore Emerging Markets. It trades about 0.05 of its potential returns per unit of risk. Ashmore Emerging Markets is currently generating about 0.11 per unit of risk. If you would invest 892.00 in Investec Emerging Markets on August 24, 2024 and sell it today you would earn a total of 186.00 from holding Investec Emerging Markets or generate 20.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investec Emerging Markets vs. Ashmore Emerging Markets
Performance |
| Timeline |
| Investec Emerging Markets |
| Ashmore Emerging Markets |
Investec Emerging and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec Emerging and Ashmore Emerging
The main advantage of trading using opposite Investec Emerging and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging position performs unexpectedly, Ashmore 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 Ashmore Emerging will offset losses from the drop in Ashmore Emerging's long position.| Investec Emerging vs. Pace Smallmedium Growth | Investec Emerging vs. Ab Centrated Growth | Investec Emerging vs. Small Pany Growth | Investec Emerging vs. Smallcap Growth Fund |
| Ashmore Emerging vs. Sit Emerging Markets | Ashmore Emerging vs. HUMANA INC | Ashmore Emerging vs. Aquagold International | Ashmore Emerging vs. Barloworld Ltd ADR |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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