Correlation Between Ashmore Emerging and Grant Park

Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and Grant Park 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 Grant Park 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 Grant Park Multi, you can compare the effects of market volatilities on Ashmore Emerging and Grant Park 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 Grant Park. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and Grant Park.

Diversification Opportunities for Ashmore Emerging and Grant Park

-0.38

Correlation Coefficient

Ashmore Emerging  Grant Park

Very good diversification

The 3 months correlation between Ashmore and Grant is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and Grant Park Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grant Park Multi 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 Grant Park. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grant Park Multi has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and Grant Park go up and down completely randomly.

Pair Corralation between Ashmore Emerging and Grant Park

Assuming the 90 days horizon Ashmore Emerging Markets is expected to generate 1.29 times more return on investment than Grant Park. However, Ashmore Emerging is 1.29 times more volatile than Grant Park Multi. It trades about 0.07 of its potential returns per unit of risk. Grant Park Multi is currently generating about 0.02 per unit of risk. If you would invest  384.00  in Ashmore Emerging Markets on September 26, 2024 and sell it today you would earn a total of  76.00  from holding Ashmore Emerging Markets or generate 19.79% return on investment over 90 days.

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

Ashmore Emerging Markets  vs.  Grant Park Multi

Ashmore Emerging Markets

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ashmore Emerging Markets are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Ashmore Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Grant Park Multi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ashmore Emerging and Grant Park

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

The idea behind Ashmore Emerging Markets and Grant Park Multi 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 Stocks Directory module to find actively traded stocks across global markets.