Correlation Between Global Advantage and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Global Advantage and Emerging Markets 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 Global Advantage and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Advantage Portfolio and Emerging Markets Equity, you can compare the effects of market volatilities on Global Advantage and Emerging Markets 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 Global Advantage with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Advantage and Emerging Markets.
Diversification Opportunities for Global Advantage and Emerging Markets
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Emerging is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Global Advantage Portfolio and Emerging Markets Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Equity and Global Advantage 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 Global Advantage Portfolio are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Equity has no effect on the direction of Global Advantage i.e., Global Advantage and Emerging Markets go up and down completely randomly.
Pair Corralation between Global Advantage and Emerging Markets
Assuming the 90 days horizon Global Advantage Portfolio is expected to generate 2.3 times more return on investment than Emerging Markets. However, Global Advantage is 2.3 times more volatile than Emerging Markets Equity. It trades about 0.17 of its potential returns per unit of risk. Emerging Markets Equity is currently generating about 0.08 per unit of risk. If you would invest 1,398 in Global Advantage Portfolio on November 19, 2024 and sell it today you would earn a total of 252.00 from holding Global Advantage Portfolio or generate 18.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Global Advantage Portfolio vs. Emerging Markets Equity
Performance |
Timeline |
Global Advantage Por |
Emerging Markets Equity |
Global Advantage and Emerging Markets Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global Advantage and Emerging Markets
The main advantage of trading using opposite Global Advantage and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Advantage position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.Global Advantage vs. Global Advantage Portfolio | ||
Global Advantage vs. Global Advantage Portfolio | ||
Global Advantage vs. Ridgeworth Innovative Growth | ||
Global Advantage vs. Transamerica Capital Growth |
Emerging Markets vs. Enhanced Large Pany | ||
Emerging Markets vs. Mutual Of America | ||
Emerging Markets vs. Tax Managed Large Cap | ||
Emerging Markets vs. Principal Lifetime Hybrid |
Check out your portfolio center.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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |