Correlation Between Ab Minnesota and Emerging Markets

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

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

Diversification Opportunities for Ab Minnesota and Emerging Markets

0.0

Correlation Coefficient

Ab Minnesota  Emerging Markets

Pay attention - limited upside

The 3 months correlation between AMNCX and Emerging is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ab Minnesota Portfolio and Emerging Markets Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Por and Ab Minnesota 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 Ab Minnesota Portfolio 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 Por has no effect on the direction of Ab Minnesota i.e., Ab Minnesota and Emerging Markets go up and down completely randomly.

Pair Corralation between Ab Minnesota and Emerging Markets

Assuming the 90 days horizon Ab Minnesota Portfolio is expected to under-perform the Emerging Markets. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ab Minnesota Portfolio is 4.42 times less risky than Emerging Markets. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Emerging Markets Portfolio is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,753  in Emerging Markets Portfolio on September 15, 2024 and sell it today you would earn a total of  6.00  from holding Emerging Markets Portfolio or generate 0.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ab Minnesota Portfolio  vs.  Emerging Markets Portfolio

Ab Minnesota Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

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

Emerging Markets Por

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ab Minnesota and Emerging Markets

The main advantage of trading using opposite Ab Minnesota and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Minnesota 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.

The idea behind Ab Minnesota Portfolio and Emerging Markets Portfolio 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .