Correlation Between Ultrashort Emerging and International Investors

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

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

Diversification Opportunities for Ultrashort Emerging and International Investors

-0.64

Correlation Coefficient

Ultrashort Emerging  International Investors

Excellent diversification

The 3 months correlation between Ultrashort and International is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ultrashort Emerging Markets and International Investors Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Investors and Ultrashort Emerging 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 Ultrashort Emerging Markets are associated (or correlated) with International Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Investors has no effect on the direction of Ultrashort Emerging i.e., Ultrashort Emerging and International Investors go up and down completely randomly.

Pair Corralation between Ultrashort Emerging and International Investors

Assuming the 90 days horizon Ultrashort Emerging Markets is expected to under-perform the International Investors. In addition to that, Ultrashort Emerging is 1.42 times more volatile than International Investors Gold. It trades about -0.01 of its total potential returns per unit of risk. International Investors Gold is currently generating about 0.01 per unit of volatility. If you would invest  1,000.00  in International Investors Gold on October 4, 2024 and sell it today you would earn a total of  40.00  from holding International Investors Gold or generate 4.0% return on investment over 90 days.

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

Ultrashort Emerging Markets  vs.  International Investors Gold

Ultrashort Emerging

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ultrashort Emerging Markets are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Ultrashort Emerging showed solid returns over the last few months and may actually be approaching a breakup point.

International Investors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Investors Gold has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Ultrashort Emerging and International Investors

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

The idea behind Ultrashort Emerging Markets and International Investors Gold 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.