Correlation Between Investec Emerging and Great West

Can any of the company-specific risk be diversified away by investing in both Investec Emerging and Great West 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 Great West 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 Great West Goldman Sachs, you can compare the effects of market volatilities on Investec Emerging and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Emerging and Great West.

Diversification Opportunities for Investec Emerging and Great West

-0.43

Correlation Coefficient

Investec Emerging  Great West

Very good diversification

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

Pair Corralation between Investec Emerging and Great West

Assuming the 90 days horizon Investec Emerging Markets is expected to generate 1.21 times more return on investment than Great West. However, Investec Emerging is 1.21 times more volatile than Great West Goldman Sachs. It trades about 0.01 of its potential returns per unit of risk. Great West Goldman Sachs is currently generating about -0.02 per unit of risk. If you would invest  1,080  in Investec Emerging Markets on September 23, 2024 and sell it today you would earn a total of  2.00  from holding Investec Emerging Markets or generate 0.19% return on investment over 90 days.

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

Investec Emerging Markets  vs.  Great West Goldman Sachs

Investec Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investec Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. 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.

Great West Goldman

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Investec Emerging and Great West

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

The idea behind Investec Emerging Markets and Great West Goldman Sachs 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.