Correlation Between World Energy and Sa Emerging
Can any of the company-specific risk be diversified away by investing in both World Energy and Sa 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 World Energy and Sa Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Energy Fund and Sa Emerging Markets, you can compare the effects of market volatilities on World Energy and Sa 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 World Energy with a short position of Sa Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Sa Emerging.
Diversification Opportunities for World Energy and Sa Emerging
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between World and SAEMX is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Sa Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sa Emerging Markets and World Energy 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 World Energy Fund are associated (or correlated) with Sa Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sa Emerging Markets has no effect on the direction of World Energy i.e., World Energy and Sa Emerging go up and down completely randomly.
Pair Corralation between World Energy and Sa Emerging
Assuming the 90 days horizon World Energy is expected to generate 1.0 times less return on investment than Sa Emerging. In addition to that, World Energy is 1.54 times more volatile than Sa Emerging Markets. It trades about 0.1 of its total potential returns per unit of risk. Sa Emerging Markets is currently generating about 0.16 per unit of volatility. If you would invest 1,099 in Sa Emerging Markets on June 6, 2025 and sell it today you would earn a total of 68.00 from holding Sa Emerging Markets or generate 6.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Energy Fund vs. Sa Emerging Markets
Performance |
| Timeline |
| World Energy |
| Sa Emerging Markets |
World Energy and Sa Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and Sa Emerging
The main advantage of trading using opposite World Energy and Sa Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, Sa 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 Sa Emerging will offset losses from the drop in Sa Emerging's long position.| World Energy vs. Bond Fund Investor | World Energy vs. Strategic Enhanced Yield | World Energy vs. Cavanal Hill Hedged | World Energy vs. Limited Duration Fund |
| Sa Emerging vs. T Rowe Price | Sa Emerging vs. Nova Fund Class | Sa Emerging vs. Semiconductor Ultrasector Profund | Sa Emerging vs. Pnc Balanced Allocation |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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