Correlation Between Ashmore Emerging and Nationwide Destination

Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and Nationwide Destination 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 Nationwide Destination 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 Nationwide Destination 2045, you can compare the effects of market volatilities on Ashmore Emerging and Nationwide Destination 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 Nationwide Destination. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and Nationwide Destination.

Diversification Opportunities for Ashmore Emerging and Nationwide Destination

0.4

Correlation Coefficient

Ashmore Emerging  Nationwide Destination

Very weak diversification

The 3 months correlation between Ashmore and Nationwide is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and Nationwide Destination 2045 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Destination 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 Nationwide Destination. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Destination has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and Nationwide Destination go up and down completely randomly.

Pair Corralation between Ashmore Emerging and Nationwide Destination

Assuming the 90 days horizon Ashmore Emerging Markets is expected to under-perform the Nationwide Destination. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ashmore Emerging Markets is 2.55 times less risky than Nationwide Destination. The mutual fund trades about -0.52 of its potential returns per unit of risk. The Nationwide Destination 2045 is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  963.00  in Nationwide Destination 2045 on October 9, 2024 and sell it today you would lose (22.00) from holding Nationwide Destination 2045 or give up 2.28% of portfolio value over 90 days.

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

Ashmore Emerging Markets  vs.  Nationwide Destination 2045

Ashmore Emerging Markets

Risk-Adjusted Performance

0 of 100

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 technical and 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.

Nationwide Destination

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nationwide Destination 2045 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nationwide Destination 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 Nationwide Destination

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

The idea behind Ashmore Emerging Markets and Nationwide Destination 2045 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.