Correlation Between Arweave and Emerging Markets

Can any of the company-specific risk be diversified away by investing in both Arweave and Emerging Markets 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 Arweave and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arweave and Emerging Markets Sector, you can compare the effects of market volatilities on Arweave and Emerging Markets 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 Arweave with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arweave and Emerging Markets.

Diversification Opportunities for Arweave and Emerging Markets

-0.42

Correlation Coefficient

Arweave  Emerging Markets

Very good diversification

The 3 months correlation between Arweave and Emerging is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Arweave and Emerging Markets Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Sector and Arweave 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 Arweave are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Sector has no effect on the direction of Arweave i.e., Arweave and Emerging Markets go up and down completely randomly.

Pair Corralation between Arweave and Emerging Markets

If you would invest  975.00  in Emerging Markets Sector on January 26, 2024 and sell it today you would earn a total of  0.00  from holding Emerging Markets Sector or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Arweave  vs.  Emerging Markets Sector

Arweave

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Arweave are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Arweave exhibited solid returns over the last few months and may actually be approaching a breakup point.

Emerging Markets Sector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerging Markets Sector has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Emerging Markets is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Arweave and Emerging Markets

The main advantage of trading using opposite Arweave and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arweave position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.

The idea behind Arweave and Emerging Markets Sector 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.