Correlation Between Investec Emerging and Wabmsx

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Can any of the company-specific risk be diversified away by investing in both Investec Emerging and Wabmsx 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 Wabmsx 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 Wabmsx, you can compare the effects of market volatilities on Investec Emerging and Wabmsx 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 Wabmsx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Emerging and Wabmsx.

Diversification Opportunities for Investec Emerging and Wabmsx

INVESTECWabmsxDiversified AwayINVESTECWabmsxDiversified Away100%
0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between INVESTEC and Wabmsx is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and Wabmsx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabmsx 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 Wabmsx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wabmsx has no effect on the direction of Investec Emerging i.e., Investec Emerging and Wabmsx go up and down completely randomly.

Pair Corralation between Investec Emerging and Wabmsx

Assuming the 90 days horizon Investec Emerging Markets is expected to generate 1.67 times more return on investment than Wabmsx. However, Investec Emerging is 1.67 times more volatile than Wabmsx. It trades about 0.27 of its potential returns per unit of risk. Wabmsx is currently generating about 0.14 per unit of risk. If you would invest  1,082  in Investec Emerging Markets on November 23, 2024 and sell it today you would earn a total of  54.00  from holding Investec Emerging Markets or generate 4.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Investec Emerging Markets  vs.  Wabmsx

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -6-4-2024
JavaScript chart by amCharts 3.21.15ZEMIX WABMSX
       Timeline  
Investec Emerging Markets 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Investec Emerging Markets are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Investec Emerging may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb10.410.610.81111.211.4
Wabmsx 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Wabmsx are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Wabmsx may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15Dec 30Jan 06Jan 13Jan 21Jan 27Feb 03Feb 10Feb 18Jan 06Jan 13Jan 21Jan 27Feb 03Feb 10Feb 1815.615.81616.216.4

Investec Emerging and Wabmsx Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.64-1.98-1.31-0.650.00.711.412.122.83 0.20.40.60.81.01.2
JavaScript chart by amCharts 3.21.15ZEMIX WABMSX
       Returns  

Pair Trading with Investec Emerging and Wabmsx

The main advantage of trading using opposite Investec Emerging and Wabmsx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging position performs unexpectedly, Wabmsx 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 Wabmsx will offset losses from the drop in Wabmsx's long position.
The idea behind Investec Emerging Markets and Wabmsx pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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