Correlation Between Abr Enhanced and Ep Emerging

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

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

Diversification Opportunities for Abr Enhanced and Ep Emerging

-0.35

Correlation Coefficient

Abr Enhanced  Ep Emerging

Very good diversification

The 3 months correlation between Abr and EPEIX is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Abr Enhanced Short and Ep Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ep Emerging Markets and Abr Enhanced 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 Abr Enhanced Short are associated (or correlated) with Ep Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ep Emerging Markets has no effect on the direction of Abr Enhanced i.e., Abr Enhanced and Ep Emerging go up and down completely randomly.

Pair Corralation between Abr Enhanced and Ep Emerging

Assuming the 90 days horizon Abr Enhanced Short is expected to generate 2.13 times more return on investment than Ep Emerging. However, Abr Enhanced is 2.13 times more volatile than Ep Emerging Markets. It trades about -0.03 of its potential returns per unit of risk. Ep Emerging Markets is currently generating about -0.26 per unit of risk. If you would invest  847.00  in Abr Enhanced Short on October 9, 2024 and sell it today you would lose (13.00) from holding Abr Enhanced Short or give up 1.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Abr Enhanced Short  vs.  Ep Emerging Markets

Abr Enhanced Short

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Abr Enhanced Short are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Abr Enhanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ep Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ep Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Abr Enhanced and Ep Emerging

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

The idea behind Abr Enhanced Short and Ep 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.