Correlation Between Investec Emerging and Western Assets
Can any of the company-specific risk be diversified away by investing in both Investec Emerging and Western Assets 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 Western Assets 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 Western Assets Emerging, you can compare the effects of market volatilities on Investec Emerging and Western Assets 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 Western Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Emerging and Western Assets.
Diversification Opportunities for Investec Emerging and Western Assets
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Investec and Western is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and Western Assets Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Assets Emerging 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 Western Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Assets Emerging has no effect on the direction of Investec Emerging i.e., Investec Emerging and Western Assets go up and down completely randomly.
Pair Corralation between Investec Emerging and Western Assets
Assuming the 90 days horizon Investec Emerging Markets is expected to generate 3.0 times more return on investment than Western Assets. However, Investec Emerging is 3.0 times more volatile than Western Assets Emerging. It trades about 0.21 of its potential returns per unit of risk. Western Assets Emerging is currently generating about 0.24 per unit of risk. If you would invest 1,178 in Investec Emerging Markets on June 3, 2025 and sell it today you would earn a total of 117.00 from holding Investec Emerging Markets or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investec Emerging Markets vs. Western Assets Emerging
Performance |
| Timeline |
| Investec Emerging Markets |
| Western Assets Emerging |
Investec Emerging and Western Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec Emerging and Western Assets
The main advantage of trading using opposite Investec Emerging and Western Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging position performs unexpectedly, Western Assets 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 Western Assets will offset losses from the drop in Western Assets' long position.| Investec Emerging vs. Invesco Gold Special | Investec Emerging vs. Global Gold Fund | Investec Emerging vs. Oppenheimer Gold Special | Investec Emerging vs. Gold And Precious |
| Western Assets vs. Vanguard Total Stock | Western Assets vs. Vanguard 500 Index | Western Assets vs. Vanguard Total Stock | Western Assets vs. Vanguard Total Stock |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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