Correlation Between Martin Currie and Themes European

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

By analyzing existing cross correlation between Martin Currie Sustainable and Themes European Luxury, you can compare the effects of market volatilities on Martin Currie and Themes European 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 Martin Currie with a short position of Themes European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Currie and Themes European.

Diversification Opportunities for Martin Currie and Themes European

0.88

Correlation Coefficient

Martin Currie  Themes European

Very poor diversification

The 3 months correlation between Martin and Themes is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Martin Currie Sustainable and Themes European Luxury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themes European Luxury and Martin Currie 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 Martin Currie Sustainable are associated (or correlated) with Themes European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themes European Luxury has no effect on the direction of Martin Currie i.e., Martin Currie and Themes European go up and down completely randomly.

Pair Corralation between Martin Currie and Themes European

Given the investment horizon of 90 days Martin Currie Sustainable is expected to under-perform the Themes European. But the etf apears to be less risky and, when comparing its historical volatility, Martin Currie Sustainable is 1.29 times less risky than Themes European. The etf trades about -0.1 of its potential returns per unit of risk. The Themes European Luxury is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,249  in Themes European Luxury on September 4, 2024 and sell it today you would lose (122.00) from holding Themes European Luxury or give up 5.42% of portfolio value over 90 days.

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

Martin Currie Sustainable  vs.  Themes European Luxury

Martin Currie Sustainable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Martin Currie Sustainable has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Themes European Luxury

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Themes European Luxury has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Themes European is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Martin Currie and Themes European

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

The idea behind Martin Currie Sustainable and Themes European Luxury 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.