Correlation Between Investec Emerging and Specialized Technology
Can any of the company-specific risk be diversified away by investing in both Investec Emerging and Specialized Technology 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 Specialized Technology 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 Specialized Technology Fund, you can compare the effects of market volatilities on Investec Emerging and Specialized Technology 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 Specialized Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Emerging and Specialized Technology.
Diversification Opportunities for Investec Emerging and Specialized Technology
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Investec and Specialized is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and Specialized Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Specialized Technology 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 Specialized Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Specialized Technology has no effect on the direction of Investec Emerging i.e., Investec Emerging and Specialized Technology go up and down completely randomly.
Pair Corralation between Investec Emerging and Specialized Technology
Assuming the 90 days horizon Investec Emerging is expected to generate 2.9 times less return on investment than Specialized Technology. In addition to that, Investec Emerging is 1.16 times more volatile than Specialized Technology Fund. It trades about 0.06 of its total potential returns per unit of risk. Specialized Technology Fund is currently generating about 0.19 per unit of volatility. If you would invest 1,184 in Specialized Technology Fund on November 4, 2024 and sell it today you would earn a total of 38.00 from holding Specialized Technology Fund or generate 3.21% 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. Specialized Technology Fund
Performance |
| Timeline |
| Investec Emerging Markets |
| Specialized Technology |
Investec Emerging and Specialized Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec Emerging and Specialized Technology
The main advantage of trading using opposite Investec Emerging and Specialized Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging position performs unexpectedly, Specialized Technology 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 Specialized Technology will offset losses from the drop in Specialized Technology's long position.| Investec Emerging vs. First Eagle Gold | Investec Emerging vs. Franklin Gold Precious | Investec Emerging vs. Global Gold Fund | Investec Emerging vs. Oppenheimer Gold Special |
| Specialized Technology vs. Oil Gas Ultrasector | Specialized Technology vs. Vanguard Energy Index | Specialized Technology vs. Fidelity Advisor Energy | Specialized Technology vs. Thrivent Natural Resources |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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