Correlation Between Investec Emerging and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Investec Emerging 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 Investec Emerging and Emerging Markets 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 Emerging Markets Equity, you can compare the effects of market volatilities on Investec Emerging 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 Investec Emerging with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Emerging and Emerging Markets.
Diversification Opportunities for Investec Emerging and Emerging Markets
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Investec and Emerging is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and Emerging Markets Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Equity 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 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 Equity has no effect on the direction of Investec Emerging i.e., Investec Emerging and Emerging Markets go up and down completely randomly.
Pair Corralation between Investec Emerging and Emerging Markets
Assuming the 90 days horizon Investec Emerging is expected to generate 1.01 times less return on investment than Emerging Markets. But when comparing it to its historical volatility, Investec Emerging Markets is 1.03 times less risky than Emerging Markets. It trades about 0.39 of its potential returns per unit of risk. Emerging Markets Equity is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 931.00 in Emerging Markets Equity on April 19, 2025 and sell it today you would earn a total of 184.00 from holding Emerging Markets Equity or generate 19.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Investec Emerging Markets vs. Emerging Markets Equity
Performance |
| Timeline |
| Investec Emerging Markets |
| Emerging Markets Equity |
Investec Emerging and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec Emerging and Emerging Markets
The main advantage of trading using opposite Investec Emerging and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging 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.| Investec Emerging vs. Hennessy Bp Energy | Investec Emerging vs. Invesco Energy Fund | Investec Emerging vs. Tortoise Energy Infrastructure | Investec Emerging vs. Jennison Natural Resources |
| Emerging Markets vs. Qs Growth Fund | Emerging Markets vs. Qs Growth Fund | Emerging Markets vs. Auer Growth Fund | Emerging Markets vs. Qs Moderate Growth |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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