Correlation Between Ep Emerging and Ab Global

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

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

Diversification Opportunities for Ep Emerging and Ab Global

0.43

Correlation Coefficient

Ep Emerging  Ab Global

Very weak diversification

The 3 months correlation between EPASX and AEEIX is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ep Emerging Markets and Ab Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global Real and Ep 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 Ep Emerging Markets are associated (or correlated) with Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global Real has no effect on the direction of Ep Emerging i.e., Ep Emerging and Ab Global go up and down completely randomly.

Pair Corralation between Ep Emerging and Ab Global

Assuming the 90 days horizon Ep Emerging Markets is expected to generate 1.18 times more return on investment than Ab Global. However, Ep Emerging is 1.18 times more volatile than Ab Global Real. It trades about -0.04 of its potential returns per unit of risk. Ab Global Real is currently generating about -0.21 per unit of risk. If you would invest  989.00  in Ep Emerging Markets on September 22, 2024 and sell it today you would lose (29.00) from holding Ep Emerging Markets or give up 2.93% of portfolio value over 90 days.

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

Ep Emerging Markets  vs.  Ab Global Real

Ep Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ab Global Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Global Real has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Ep Emerging and Ab Global

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

The idea behind Ep Emerging Markets and Ab Global Real 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.