Correlation Between Aggressive Balanced and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Aggressive Balanced and Emerging Markets 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 Aggressive Balanced and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aggressive Balanced Allocation and Emerging Markets Fund, you can compare the effects of market volatilities on Aggressive Balanced and Emerging Markets 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 Aggressive Balanced with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aggressive Balanced and Emerging Markets.
Diversification Opportunities for Aggressive Balanced and Emerging Markets
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aggressive and Emerging is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Balanced Allocation and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and Aggressive Balanced 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 Aggressive Balanced Allocation are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Aggressive Balanced i.e., Aggressive Balanced and Emerging Markets go up and down completely randomly.
Pair Corralation between Aggressive Balanced and Emerging Markets
Assuming the 90 days horizon Aggressive Balanced is expected to generate 1.32 times less return on investment than Emerging Markets. But when comparing it to its historical volatility, Aggressive Balanced Allocation is 1.49 times less risky than Emerging Markets. It trades about 0.19 of its potential returns per unit of risk. Emerging Markets Fund is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,611 in Emerging Markets Fund on June 5, 2025 and sell it today you would earn a total of 128.00 from holding Emerging Markets Fund or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aggressive Balanced Allocation vs. Emerging Markets Fund
Performance |
| Timeline |
| Aggressive Balanced |
| Emerging Markets |
Aggressive Balanced and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aggressive Balanced and Emerging Markets
The main advantage of trading using opposite Aggressive Balanced and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aggressive Balanced position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Aggressive Balanced vs. Franklin Equity Income | Aggressive Balanced vs. Small Cap Equity | Aggressive Balanced vs. Us Vector Equity | Aggressive Balanced vs. Touchstone International Equity |
| Emerging Markets vs. Allianzgi Technology Fund | Emerging Markets vs. Biotechnology Ultrasector Profund | Emerging Markets vs. Red Oak Technology | Emerging Markets vs. Columbia Global Technology |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| AI Portfolio Prophet Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Stocks Directory Find actively traded stocks across global markets |