Correlation Between Investec Global and Prudential Emerging
Can any of the company-specific risk be diversified away by investing in both Investec Global and Prudential 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 Global and Prudential Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec Global Franchise and Prudential Emerging Markets, you can compare the effects of market volatilities on Investec Global and Prudential 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 Global with a short position of Prudential Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Global and Prudential Emerging.
Diversification Opportunities for Investec Global and Prudential Emerging
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Investec and Prudential is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Investec Global Franchise and Prudential Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Emerging and Investec Global 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 Global Franchise are associated (or correlated) with Prudential Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Emerging has no effect on the direction of Investec Global i.e., Investec Global and Prudential Emerging go up and down completely randomly.
Pair Corralation between Investec Global and Prudential Emerging
Assuming the 90 days horizon Investec Global Franchise is expected to generate 1.64 times more return on investment than Prudential Emerging. However, Investec Global is 1.64 times more volatile than Prudential Emerging Markets. It trades about 0.06 of its potential returns per unit of risk. Prudential Emerging Markets is currently generating about 0.04 per unit of risk. If you would invest 1,474 in Investec Global Franchise on November 2, 2024 and sell it today you would earn a total of 346.00 from holding Investec Global Franchise or generate 23.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investec Global Franchise vs. Prudential Emerging Markets
Performance |
| Timeline |
| Investec Global Franchise |
| Prudential Emerging |
Investec Global and Prudential Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec Global and Prudential Emerging
The main advantage of trading using opposite Investec Global and Prudential Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Global position performs unexpectedly, Prudential 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 Prudential Emerging will offset losses from the drop in Prudential Emerging's long position.| Investec Global vs. The Hartford High | Investec Global vs. Chartwell Short Duration | Investec Global vs. Us High Relative | Investec Global vs. Siit High Yield |
| Prudential Emerging vs. Hsbc Government Money | Prudential Emerging vs. Inverse Government Long | Prudential Emerging vs. Virtus Seix Government | Prudential Emerging vs. Dunham Porategovernment Bond |
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.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |