Correlation Between Energy Basic and Sa Emerging
Can any of the company-specific risk be diversified away by investing in both Energy Basic 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 Energy Basic and Sa Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Basic Materials and Sa Emerging Markets, you can compare the effects of market volatilities on Energy Basic 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 Energy Basic with a short position of Sa Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Basic and Sa Emerging.
Diversification Opportunities for Energy Basic and Sa Emerging
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Energy and SAEMX is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Energy Basic Materials 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 Energy Basic 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 Energy Basic Materials 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 Energy Basic i.e., Energy Basic and Sa Emerging go up and down completely randomly.
Pair Corralation between Energy Basic and Sa Emerging
Assuming the 90 days horizon Energy Basic Materials is expected to generate 1.42 times more return on investment than Sa Emerging. However, Energy Basic is 1.42 times more volatile than Sa Emerging Markets. It trades about 0.11 of its potential returns per unit of risk. Sa Emerging Markets is currently generating about 0.13 per unit of risk. If you would invest 1,273 in Energy Basic Materials on June 7, 2025 and sell it today you would earn a total of 73.00 from holding Energy Basic Materials or generate 5.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Basic Materials vs. Sa Emerging Markets
Performance |
| Timeline |
| Energy Basic Materials |
| Sa Emerging Markets |
Energy Basic and Sa Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Basic and Sa Emerging
The main advantage of trading using opposite Energy Basic and Sa Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Basic 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.| Energy Basic vs. Ms Global Fixed | Energy Basic vs. Scharf Global Opportunity | Energy Basic vs. Artisan Global Opportunities | Energy Basic vs. Templeton Global Balanced |
| Sa Emerging vs. Ep Emerging Markets | Sa Emerging vs. Western Assets Emerging | Sa Emerging vs. Ep Emerging Markets | Sa Emerging vs. Ashmore Emerging Markets |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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