diversifiable risk of combining Fidelity New and Ashmore Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity New Markets and Ashmore Emerging Markets, you can compare the effects of market volatilities on Fidelity New and Ashmore 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 Fidelity New with a short position of Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity New and Ashmore Emerging.
Diversification Opportunities for Fidelity New and Ashmore Emerging
Pair Corralation between Fidelity New and Ashmore Emerging
Assuming the 90 days horizon Fidelity New Markets is expected to generate 1.38 times more return on investment than Ashmore Emerging. However, Fidelity New is 1.38 times more volatile than Ashmore Emerging Markets. It trades about -0.01 of its potential returns per unit of risk. Ashmore Emerging Markets is currently generating about -0.05 per unit of risk. If you would invest 1,267 in Fidelity New Markets on November 24, 2023 and sell it today you would lose (40.00) from holding Fidelity New Markets or give up 3.16% of portfolio value over 90 days.
FIDELITY NEW MARKETS vs. Ashmore Emerging Markets
Fidelity New and Ashmore Emerging Volatility Contrast
Pair Trading with Fidelity New and Ashmore EmergingThe main advantage of trading using opposite Fidelity New and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity New position performs unexpectedly, Ashmore 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 Ashmore Emerging will offset losses from the drop in Ashmore Emerging's long position. The idea behind Fidelity New Markets and Ashmore Emerging Markets 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.
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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