Correlation Between Emerging Markets and International Advantage
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and International Advantage 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 Emerging Markets and International Advantage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Equity and International Advantage Portfolio, you can compare the effects of market volatilities on Emerging Markets and International Advantage 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 Emerging Markets with a short position of International Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and International Advantage.
Diversification Opportunities for Emerging Markets and International Advantage
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Emerging and International is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Equity and International Advantage Portfo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Advantage and Emerging Markets 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 Emerging Markets Equity are associated (or correlated) with International Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Advantage has no effect on the direction of Emerging Markets i.e., Emerging Markets and International Advantage go up and down completely randomly.
Pair Corralation between Emerging Markets and International Advantage
If you would invest (100.00) in International Advantage Portfolio on February 3, 2024 and sell it today you would earn a total of 100.00 from holding International Advantage Portfolio or generate -100.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Emerging Markets Equity vs. International Advantage Portfo
Performance |
Timeline |
Emerging Markets Equity |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
International Advantage |
Emerging Markets and International Advantage Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Emerging Markets and International Advantage
The main advantage of trading using opposite Emerging Markets and International Advantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, International Advantage 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 International Advantage will offset losses from the drop in International Advantage's long position.Emerging Markets vs. Transamerica Financial Life | Emerging Markets vs. Financials Ultrasector Profund | Emerging Markets vs. 1919 Financial Services | Emerging Markets vs. Mesirow Financial Small |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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