Correlation Between Emerging Markets and Ultra Short
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Ultra Short 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 Ultra Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Equity and Ultra Short Income, you can compare the effects of market volatilities on Emerging Markets and Ultra Short 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 Ultra Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Ultra Short.
Diversification Opportunities for Emerging Markets and Ultra Short
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Emerging and Ultra is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Equity and Ultra Short Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Short Income 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 Emerging Markets Equity are associated (or correlated) with Ultra Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Short Income has no effect on the direction of Emerging Markets i.e., Emerging Markets and Ultra Short go up and down completely randomly.
Pair Corralation between Emerging Markets and Ultra Short
If you would invest 1,349 in Emerging Markets Equity on December 5, 2024 and sell it today you would earn a total of 18.00 from holding Emerging Markets Equity or generate 1.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Emerging Markets Equity vs. Ultra Short Income
Performance |
Timeline |
Emerging Markets Equity |
Ultra Short Income |
Emerging Markets and Ultra Short Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Emerging Markets and Ultra Short
The main advantage of trading using opposite Emerging Markets and Ultra Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Ultra Short 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 Ultra Short will offset losses from the drop in Ultra Short's long position.Emerging Markets vs. Legg Mason Partners | Emerging Markets vs. Voya Government Money | Emerging Markets vs. Jpmorgan Trust I | Emerging Markets vs. First American Funds |
Ultra Short vs. Morningstar Global Income | Ultra Short vs. Scharf Global Opportunity | Ultra Short vs. Dws Global Macro | Ultra Short vs. Ab Global Real |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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