Correlation Between Investec Emerging and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Investec Emerging and Metropolitan West 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 Metropolitan West 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 Metropolitan West Total, you can compare the effects of market volatilities on Investec Emerging and Metropolitan West 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 Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Emerging and Metropolitan West.
Diversification Opportunities for Investec Emerging and Metropolitan West
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Investec and Metropolitan is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and Metropolitan West Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West Total 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 Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West Total has no effect on the direction of Investec Emerging i.e., Investec Emerging and Metropolitan West go up and down completely randomly.
Pair Corralation between Investec Emerging and Metropolitan West
Assuming the 90 days horizon Investec Emerging Markets is expected to generate 1.99 times more return on investment than Metropolitan West. However, Investec Emerging is 1.99 times more volatile than Metropolitan West Total. It trades about 0.05 of its potential returns per unit of risk. Metropolitan West Total is currently generating about 0.04 per unit of risk. If you would invest 940.00 in Investec Emerging Markets on September 12, 2024 and sell it today you would earn a total of 132.00 from holding Investec Emerging Markets or generate 14.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investec Emerging Markets vs. Metropolitan West Total
Performance |
| Timeline |
| Investec Emerging Markets |
| Metropolitan West Total |
Investec Emerging and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec Emerging and Metropolitan West
The main advantage of trading using opposite Investec Emerging and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West's long position.| Investec Emerging vs. American Funds New | Investec Emerging vs. SCOR PK | Investec Emerging vs. Morningstar Unconstrained Allocation | Investec Emerging vs. Via Renewables |
| Metropolitan West vs. Investec Emerging Markets | Metropolitan West vs. Nasdaq 100 2x Strategy | Metropolitan West vs. Mid Cap 15x Strategy | Metropolitan West vs. Origin Emerging Markets |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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