Correlation Between Walden Smid and Johcm Emerging

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

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

Diversification Opportunities for Walden Smid and Johcm Emerging

-0.3

Correlation Coefficient

Walden Smid  Johcm Emerging

Very good diversification

The 3 months correlation between Walden and Johcm is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Walden Smid Cap and Johcm Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johcm Emerging Markets and Walden Smid 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 Walden Smid Cap are associated (or correlated) with Johcm Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johcm Emerging Markets has no effect on the direction of Walden Smid i.e., Walden Smid and Johcm Emerging go up and down completely randomly.

Pair Corralation between Walden Smid and Johcm Emerging

Assuming the 90 days horizon Walden Smid Cap is expected to under-perform the Johcm Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, Walden Smid Cap is 1.25 times less risky than Johcm Emerging. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Johcm Emerging Markets is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,140  in Johcm Emerging Markets on December 29, 2024 and sell it today you would earn a total of  72.00  from holding Johcm Emerging Markets or generate 6.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Walden Smid Cap  vs.  Johcm Emerging Markets

Walden Smid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walden Smid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Walden Smid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Johcm Emerging Markets

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Johcm Emerging Markets are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Johcm Emerging may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Walden Smid and Johcm Emerging

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

The idea behind Walden Smid Cap and Johcm 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.