Correlation Between Ashmore Emerging and Marriott International
Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and Marriott International 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 Ashmore Emerging and Marriott International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashmore Emerging Markets and Marriott International, you can compare the effects of market volatilities on Ashmore Emerging and Marriott International 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 Ashmore Emerging with a short position of Marriott International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and Marriott International.
Diversification Opportunities for Ashmore Emerging and Marriott International
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ashmore and Marriott is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and Marriott International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott International and Ashmore 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 Ashmore Emerging Markets are associated (or correlated) with Marriott International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marriott International has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and Marriott International go up and down completely randomly.
Pair Corralation between Ashmore Emerging and Marriott International
Assuming the 90 days horizon Ashmore Emerging is expected to generate 1.56 times less return on investment than Marriott International. But when comparing it to its historical volatility, Ashmore Emerging Markets is 1.56 times less risky than Marriott International. It trades about 0.18 of its potential returns per unit of risk. Marriott International is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 18,479 in Marriott International on January 25, 2024 and sell it today you would earn a total of 5,927 from holding Marriott International or generate 32.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashmore Emerging Markets vs. Marriott International
Performance |
| Timeline |
| Ashmore Emerging Markets |
| Marriott International |
Ashmore Emerging and Marriott International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Emerging and Marriott International
The main advantage of trading using opposite Ashmore Emerging and Marriott International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, Marriott International 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 Marriott International will offset losses from the drop in Marriott International's long position.| Ashmore Emerging vs. Amana Income Fund | Ashmore Emerging vs. Amana Growth Fund | Ashmore Emerging vs. Amana Participation Fund | Ashmore Emerging vs. HUMANA INC |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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