Correlation Between Investec Emerging and American High
Can any of the company-specific risk be diversified away by investing in both Investec Emerging and American High 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 Emerging and American High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec Emerging Markets and American High Income Municipal, you can compare the effects of market volatilities on Investec Emerging and American High 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 Emerging with a short position of American High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Emerging and American High.
Diversification Opportunities for Investec Emerging and American High
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Investec and American is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and American High Income Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American High Income and Investec 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 Investec Emerging Markets are associated (or correlated) with American High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American High Income has no effect on the direction of Investec Emerging i.e., Investec Emerging and American High go up and down completely randomly.
Pair Corralation between Investec Emerging and American High
Assuming the 90 days horizon Investec Emerging Markets is expected to generate 4.08 times more return on investment than American High. However, Investec Emerging is 4.08 times more volatile than American High Income Municipal. It trades about 0.17 of its potential returns per unit of risk. American High Income Municipal is currently generating about 0.05 per unit of risk. If you would invest 995.00 in Investec Emerging Markets on March 1, 2024 and sell it today you would earn a total of 30.00 from holding Investec Emerging Markets or generate 3.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Investec Emerging Markets vs. American High Income Municipal
Performance |
Timeline |
Investec Emerging Markets |
American High Income |
Investec Emerging and American High Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Investec Emerging and American High
The main advantage of trading using opposite Investec Emerging and American High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging position performs unexpectedly, American High 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 American High will offset losses from the drop in American High's long position.Investec Emerging vs. Vanguard Emerging Markets | Investec Emerging vs. Vanguard Emerging Markets | Investec Emerging vs. Vanguard Emerging Markets | Investec Emerging vs. Vanguard Emerging Markets |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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