Correlation Between Investec Emerging and Hawaii Municipal

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

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

Diversification Opportunities for Investec Emerging and Hawaii Municipal

0.0

Correlation Coefficient

Investec Emerging  Hawaii Municipal

Pay attention - limited upside

The 3 months correlation between Investec and Hawaii is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and Hawaii Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawaii Municipal Bond and Investec 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 Investec Emerging Markets are associated (or correlated) with Hawaii Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawaii Municipal Bond has no effect on the direction of Investec Emerging i.e., Investec Emerging and Hawaii Municipal go up and down completely randomly.

Pair Corralation between Investec Emerging and Hawaii Municipal

If you would invest  1,066  in Investec Emerging Markets on December 21, 2024 and sell it today you would earn a total of  70.00  from holding Investec Emerging Markets or generate 6.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.69%
Values	Daily Returns

Investec Emerging Markets  vs.  Hawaii Municipal Bond

Investec Emerging Markets

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Investec Emerging Markets are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Investec Emerging may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Hawaii Municipal Bond

Risk-Adjusted Performance

Modest

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

Pair Trading with Investec Emerging and Hawaii Municipal

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

The idea behind Investec Emerging Markets and Hawaii Municipal Bond 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.