Correlation Between Ep Emerging and Consumer Staples

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

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

Diversification Opportunities for Ep Emerging and Consumer Staples

0.57

Correlation Coefficient

Ep Emerging  Consumer Staples

Very weak diversification

The 3 months correlation between EPASX and Consumer is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ep Emerging Markets and Consumer Staples Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Por and Ep 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 Ep Emerging Markets are associated (or correlated) with Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Por has no effect on the direction of Ep Emerging i.e., Ep Emerging and Consumer Staples go up and down completely randomly.

Pair Corralation between Ep Emerging and Consumer Staples

Assuming the 90 days horizon Ep Emerging Markets is expected to generate 0.42 times more return on investment than Consumer Staples. However, Ep Emerging Markets is 2.4 times less risky than Consumer Staples. It trades about -0.31 of its potential returns per unit of risk. Consumer Staples Portfolio is currently generating about -0.37 per unit of risk. If you would invest  984.00  in Ep Emerging Markets on October 7, 2024 and sell it today you would lose (35.00) from holding Ep Emerging Markets or give up 3.56% of portfolio value over 90 days.

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

Ep Emerging Markets  vs.  Consumer Staples Portfolio

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 weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Consumer Staples Por

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consumer Staples Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental 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 Ep Emerging and Consumer Staples

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

The idea behind Ep Emerging Markets and Consumer Staples Portfolio 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .