Correlation Between Henderson Emerging and Intech Managed

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

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

Diversification Opportunities for Henderson Emerging and Intech Managed

-0.43

Correlation Coefficient

Henderson Emerging  Intech Managed

Very good diversification

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

Pair Corralation between Henderson Emerging and Intech Managed

Assuming the 90 days horizon Henderson Emerging is expected to generate 2.38 times less return on investment than Intech Managed. In addition to that, Henderson Emerging is 1.11 times more volatile than Intech Managed Volatility. It trades about 0.03 of its total potential returns per unit of risk. Intech Managed Volatility is currently generating about 0.08 per unit of volatility. If you would invest  859.00  in Intech Managed Volatility on September 21, 2024 and sell it today you would earn a total of  295.00  from holding Intech Managed Volatility or generate 34.34% return on investment over 90 days.

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

Henderson Emerging Markets  vs.  Intech Managed Volatility

Henderson Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

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

Intech Managed Volatility

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Henderson Emerging and Intech Managed

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

The idea behind Henderson Emerging Markets and Intech Managed Volatility 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 .