Correlation Between Ashmore Emerging and Dreyfus International

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Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and Dreyfus International 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 Ashmore Emerging and Dreyfus International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashmore Emerging Markets and Dreyfus International Bond, you can compare the effects of market volatilities on Ashmore Emerging and Dreyfus International 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 Ashmore Emerging with a short position of Dreyfus International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and Dreyfus International.

Diversification Opportunities for Ashmore Emerging and Dreyfus International

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Ashmore and Dreyfus is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and Dreyfus International Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus International and Ashmore 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 Ashmore Emerging Markets are associated (or correlated) with Dreyfus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus International has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and Dreyfus International go up and down completely randomly.

Pair Corralation between Ashmore Emerging and Dreyfus International

Assuming the 90 days horizon Ashmore Emerging Markets is expected to generate 0.38 times more return on investment than Dreyfus International. However, Ashmore Emerging Markets is 2.61 times less risky than Dreyfus International. It trades about -0.1 of its potential returns per unit of risk. Dreyfus International Bond is currently generating about -0.2 per unit of risk. If you would invest  582.00  in Ashmore Emerging Markets on October 7, 2024 and sell it today you would lose (8.00) from holding Ashmore Emerging Markets or give up 1.37% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Ashmore Emerging Markets  vs.  Dreyfus International Bond

 Performance 
       Timeline  
Ashmore Emerging Markets 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

0 of 100

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

Ashmore Emerging and Dreyfus International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ashmore Emerging and Dreyfus International

The main advantage of trading using opposite Ashmore Emerging and Dreyfus International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, Dreyfus International 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 Dreyfus International will offset losses from the drop in Dreyfus International's long position.
The idea behind Ashmore Emerging Markets and Dreyfus International Bond 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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