Correlation Between Smallcap Growth and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth and Ashmore 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 Smallcap Growth and Ashmore Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Growth Fund and Ashmore Emerging Markets, you can compare the effects of market volatilities on Smallcap Growth and Ashmore 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 Smallcap Growth with a short position of Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and Ashmore Emerging.
Diversification Opportunities for Smallcap Growth and Ashmore Emerging
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Smallcap and Ashmore is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Ashmore Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Emerging Markets and Smallcap Growth 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 Smallcap Growth Fund are associated (or correlated) with Ashmore Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Emerging Markets has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Ashmore Emerging go up and down completely randomly.
Pair Corralation between Smallcap Growth and Ashmore Emerging
Assuming the 90 days horizon Smallcap Growth Fund is expected to under-perform the Ashmore Emerging. In addition to that, Smallcap Growth is 5.01 times more volatile than Ashmore Emerging Markets. It trades about -0.29 of its total potential returns per unit of risk. Ashmore Emerging Markets is currently generating about 0.23 per unit of volatility. If you would invest 574.00 in Ashmore Emerging Markets on December 2, 2024 and sell it today you would earn a total of 6.00 from holding Ashmore Emerging Markets or generate 1.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Smallcap Growth Fund vs. Ashmore Emerging Markets
Performance |
Timeline |
Smallcap Growth |
Ashmore Emerging Markets |
Smallcap Growth and Ashmore Emerging Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Smallcap Growth and Ashmore Emerging
The main advantage of trading using opposite Smallcap Growth and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth position performs unexpectedly, Ashmore 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 Ashmore Emerging will offset losses from the drop in Ashmore Emerging's long position.Smallcap Growth vs. Vanguard Energy Index | Smallcap Growth vs. Blackrock All Cap Energy | Smallcap Growth vs. World Energy Fund | Smallcap Growth vs. Alpsalerian Energy Infrastructure |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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