Correlation Between Multimedia Portfolio and Emerging Markets

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

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

Diversification Opportunities for Multimedia Portfolio and Emerging Markets

-0.37

Correlation Coefficient

Multimedia Portfolio  Emerging Markets

Very good diversification

The 3 months correlation between Multimedia and Emerging is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Multimedia Portfolio Multimedi 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 Multimedia Portfolio 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 Multimedia Portfolio Multimedia 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 Multimedia Portfolio i.e., Multimedia Portfolio and Emerging Markets go up and down completely randomly.

Pair Corralation between Multimedia Portfolio and Emerging Markets

Assuming the 90 days horizon Multimedia Portfolio Multimedia is expected to generate 1.04 times more return on investment than Emerging Markets. However, Multimedia Portfolio is 1.04 times more volatile than Emerging Markets Equity. It trades about 0.2 of its potential returns per unit of risk. Emerging Markets Equity is currently generating about 0.0 per unit of risk. If you would invest  10,205  in Multimedia Portfolio Multimedia on September 18, 2024 and sell it today you would earn a total of  1,379  from holding Multimedia Portfolio Multimedia or generate 13.51% return on investment over 90 days.

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

Multimedia Portfolio Multimedi  vs.  Emerging Markets Equity

Multimedia Portfolio

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multimedia Portfolio Multimedia are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Multimedia Portfolio showed solid returns over the last few months and may actually be approaching a breakup point.

Emerging Markets Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerging Markets Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic 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 Multimedia Portfolio and Emerging Markets

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

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.