Correlation Between Investec Emerging and American Funds
Can any of the company-specific risk be diversified away by investing in both Investec Emerging and American Funds 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 American Funds 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 American Funds Growth, you can compare the effects of market volatilities on Investec Emerging and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Emerging and American Funds.
Diversification Opportunities for Investec Emerging and American Funds
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Investec and American is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and American Funds Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Growth 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Growth has no effect on the direction of Investec Emerging i.e., Investec Emerging and American Funds go up and down completely randomly.
Pair Corralation between Investec Emerging and American Funds
Assuming the 90 days horizon Investec Emerging Markets is expected to generate 1.11 times more return on investment than American Funds. However, Investec Emerging is 1.11 times more volatile than American Funds Growth. It trades about 0.01 of its potential returns per unit of risk. American Funds Growth is currently generating about -0.01 per unit of risk. If you would invest 1,082 in Investec Emerging Markets on September 25, 2024 and sell it today you would earn a total of 0.00 from holding Investec Emerging Markets or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Investec Emerging Markets vs. American Funds Growth
Performance |
Timeline |
Investec Emerging Markets |
American Funds Growth |
Investec Emerging and American Funds Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Investec Emerging and American Funds
The main advantage of trading using opposite Investec Emerging and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.Investec Emerging vs. Small Cap Value Fund | Investec Emerging vs. Lsv Small Cap | Investec Emerging vs. Hennessy Nerstone Mid | Investec Emerging vs. Victory Rs Partners |
American Funds vs. Calvert Developed Market | American Funds vs. Extended Market Index | American Funds vs. Investec Emerging Markets | American Funds vs. Locorr Market Trend |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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