Correlation Between Emerging Markets and Turner Emerging

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

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

Diversification Opportunities for Emerging Markets and Turner Emerging

-0.07

Correlation Coefficient

Emerging Markets  Turner Emerging

Good diversification

The 3 months correlation between Emerging and Turner is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding The Emerging Markets and Turner Emerging Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turner Emerging Growth and Emerging Markets 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 The Emerging Markets are associated (or correlated) with Turner Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turner Emerging Growth has no effect on the direction of Emerging Markets i.e., Emerging Markets and Turner Emerging go up and down completely randomly.

Pair Corralation between Emerging Markets and Turner Emerging

Assuming the 90 days horizon Emerging Markets is expected to generate 1.96 times less return on investment than Turner Emerging. In addition to that, Emerging Markets is 1.06 times more volatile than Turner Emerging Growth. It trades about 0.08 of its total potential returns per unit of risk. Turner Emerging Growth is currently generating about 0.18 per unit of volatility. If you would invest  1,422  in Turner Emerging Growth on September 12, 2024 and sell it today you would earn a total of  149.00  from holding Turner Emerging Growth or generate 10.48% return on investment over 90 days.

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

The Emerging Markets  vs.  Turner Emerging Growth

Emerging Markets

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Emerging Markets are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Emerging Markets is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Turner Emerging Growth

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Turner Emerging Growth are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Turner Emerging may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Emerging Markets and Turner Emerging

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

The idea behind The Emerging Markets and Turner Emerging Growth 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.