Correlation Between Emerging Markets and Zero Pon

Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Zero Pon 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 Emerging Markets and Zero Pon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Emerging Markets Fund and Zero Pon 2025, you can compare the effects of market volatilities on Emerging Markets and Zero Pon 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 Emerging Markets with a short position of Zero Pon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Zero Pon.

Diversification Opportunities for Emerging Markets and Zero Pon

-0.45

Correlation Coefficient

Emerging Markets  Zero Pon

Very good diversification

The 3 months correlation between Emerging and Zero is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Fund and Zero Pon 2025 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zero Pon 2025 and Emerging Markets 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 Emerging Markets Fund are associated (or correlated) with Zero Pon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zero Pon 2025 has no effect on the direction of Emerging Markets i.e., Emerging Markets and Zero Pon go up and down completely randomly.

Pair Corralation between Emerging Markets and Zero Pon

Assuming the 90 days horizon Emerging Markets Fund is expected to under-perform the Zero Pon. In addition to that, Emerging Markets is 19.88 times more volatile than Zero Pon 2025. It trades about -0.1 of its total potential returns per unit of risk. Zero Pon 2025 is currently generating about 0.11 per unit of volatility. If you would invest  10,469  in Zero Pon 2025 on October 1, 2024 and sell it today you would earn a total of  32.00  from holding Zero Pon 2025 or generate 0.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Emerging Markets Fund  vs.  Zero Pon 2025

Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerging Markets Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Emerging Markets is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zero Pon 2025

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zero Pon 2025 are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Zero Pon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Emerging Markets and Zero Pon

The main advantage of trading using opposite Emerging Markets and Zero Pon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Zero Pon 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 Zero Pon will offset losses from the drop in Zero Pon's long position.

The idea behind Emerging Markets Fund and Zero Pon 2025 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.