Correlation Between Investec Emerging and Locorr Dynamic

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

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

Diversification Opportunities for Investec Emerging and Locorr Dynamic

0.04

Correlation Coefficient

Investec Emerging  Locorr Dynamic

Significant diversification

The 3 months correlation between Investec and Locorr is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and Locorr Dynamic Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Dynamic Equity and Investec 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 Investec Emerging Markets are associated (or correlated) with Locorr Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Dynamic Equity has no effect on the direction of Investec Emerging i.e., Investec Emerging and Locorr Dynamic go up and down completely randomly.

Pair Corralation between Investec Emerging and Locorr Dynamic

Assuming the 90 days horizon Investec Emerging Markets is expected to generate 1.49 times more return on investment than Locorr Dynamic. However, Investec Emerging is 1.49 times more volatile than Locorr Dynamic Equity. It trades about 0.05 of its potential returns per unit of risk. Locorr Dynamic Equity is currently generating about 0.06 per unit of risk. If you would invest  940.00  in Investec Emerging Markets on September 12, 2024 and sell it today you would earn a total of  132.00  from holding Investec Emerging Markets or generate 14.04% return on investment over 90 days.

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

Investec Emerging Markets  vs.  Locorr Dynamic Equity

Investec Emerging Markets

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Investec Emerging Markets are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Investec Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Locorr Dynamic Equity

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Locorr Dynamic Equity are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Locorr Dynamic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Investec Emerging and Locorr Dynamic

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

The idea behind Investec Emerging Markets and Locorr Dynamic 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..