Correlation Between Intech Managed and Henderson Emerging

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

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

Diversification Opportunities for Intech Managed and Henderson Emerging

-0.46

Correlation Coefficient

Intech Managed  Henderson Emerging

Very good diversification

The 3 months correlation between Intech and Henderson is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Intech Managed Volatility and Henderson Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson Emerging and Intech Managed 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 Intech Managed Volatility are associated (or correlated) with Henderson Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson Emerging has no effect on the direction of Intech Managed i.e., Intech Managed and Henderson Emerging go up and down completely randomly.

Pair Corralation between Intech Managed and Henderson Emerging

Assuming the 90 days horizon Intech Managed Volatility is expected to generate 0.97 times more return on investment than Henderson Emerging. However, Intech Managed Volatility is 1.03 times less risky than Henderson Emerging. It trades about 0.04 of its potential returns per unit of risk. Henderson Emerging Markets is currently generating about -0.04 per unit of risk. If you would invest  1,170  in Intech Managed Volatility on September 25, 2024 and sell it today you would earn a total of  21.00  from holding Intech Managed Volatility or generate 1.79% return on investment over 90 days.

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

Intech Managed Volatility  vs.  Henderson Emerging Markets

Intech Managed Volatility

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intech Managed Volatility are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Intech Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Intech Managed and Henderson Emerging

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

The idea behind Intech Managed Volatility and Henderson Emerging Markets 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.