Correlation Between Causeway Emerging and Causeway Global

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

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

Diversification Opportunities for Causeway Emerging and Causeway Global

0.0

Correlation Coefficient

Causeway Emerging  Causeway Global

Pay attention - limited upside

The 3 months correlation between Causeway and Causeway is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Causeway Emerging Markets and Causeway Global Absolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway Global Absolute and Causeway 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 Causeway Emerging Markets are associated (or correlated) with Causeway Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway Global Absolute has no effect on the direction of Causeway Emerging i.e., Causeway Emerging and Causeway Global go up and down completely randomly.

Pair Corralation between Causeway Emerging and Causeway Global

If you would invest  1,132  in Causeway Emerging Markets on May 3, 2025 and sell it today you would earn a total of  167.00  from holding Causeway Emerging Markets or generate 14.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

Causeway Emerging Markets  vs.  Causeway Global Absolute

Causeway Emerging Markets

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Causeway Emerging Markets are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Causeway Emerging showed solid returns over the last few months and may actually be approaching a breakup point.

Causeway Global Absolute

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Causeway Emerging and Causeway Global

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

The idea behind Causeway Emerging Markets and Causeway Global Absolute 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.