Correlation Between Unconstrained Emerging and Cm Modity

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

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

Diversification Opportunities for Unconstrained Emerging and Cm Modity

0.67

Correlation Coefficient

Unconstrained Emerging  Cm Modity

Poor diversification

The 3 months correlation between Unconstrained and COMIX is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Unconstrained Emerging Markets and Cm Modity Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cm Modity Index and Unconstrained 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 Unconstrained Emerging Markets are associated (or correlated) with Cm Modity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cm Modity Index has no effect on the direction of Unconstrained Emerging i.e., Unconstrained Emerging and Cm Modity go up and down completely randomly.

Pair Corralation between Unconstrained Emerging and Cm Modity

Assuming the 90 days horizon Unconstrained Emerging Markets is expected to generate 0.42 times more return on investment than Cm Modity. However, Unconstrained Emerging Markets is 2.36 times less risky than Cm Modity. It trades about -0.11 of its potential returns per unit of risk. Cm Modity Index is currently generating about -0.12 per unit of risk. If you would invest  545.00  in Unconstrained Emerging Markets on August 12, 2024 and sell it today you would lose (5.00) from holding Unconstrained Emerging Markets or give up 0.92% of portfolio value over 90 days.

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

Unconstrained Emerging Markets  vs.  Cm Modity Index

Unconstrained Emerging

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Unconstrained Emerging Markets are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Unconstrained Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cm Modity Index

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Unconstrained Emerging and Cm Modity

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

The idea behind Unconstrained Emerging Markets and Cm Modity Index 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.