Correlation Between Upright Growth and Emerging Markets

Can any of the company-specific risk be diversified away by investing in both Upright Growth 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 Upright Growth and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Upright Growth Income and The Emerging Markets, you can compare the effects of market volatilities on Upright Growth 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 Upright Growth with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Upright Growth and Emerging Markets.

Diversification Opportunities for Upright Growth and Emerging Markets

0.04

Correlation Coefficient

Upright Growth  Emerging Markets

Significant diversification

The 3 months correlation between Upright and Emerging is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Upright Growth Income and The Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and Upright 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 Upright Growth Income 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 has no effect on the direction of Upright Growth i.e., Upright Growth and Emerging Markets go up and down completely randomly.

Pair Corralation between Upright Growth and Emerging Markets

Assuming the 90 days horizon Upright Growth Income is expected to under-perform the Emerging Markets. In addition to that, Upright Growth is 2.22 times more volatile than The Emerging Markets. It trades about -0.04 of its total potential returns per unit of risk. The Emerging Markets is currently generating about 0.09 per unit of volatility. If you would invest  1,953  in The Emerging Markets on December 22, 2024 and sell it today you would earn a total of  118.00  from holding The Emerging Markets or generate 6.04% return on investment over 90 days.

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

Upright Growth Income  vs.  The Emerging Markets

Upright Growth Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Upright Growth Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Emerging Markets

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Emerging Markets are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Emerging Markets may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Upright Growth and Emerging Markets

The main advantage of trading using opposite Upright Growth and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Upright Growth 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.

The idea behind Upright Growth Income and The Emerging Markets 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.