Correlation Between Floating Rate and Investec Emerging

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

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

Diversification Opportunities for Floating Rate and Investec Emerging

0.95

Correlation Coefficient

Floating Rate  Investec Emerging

Almost no diversification

The 3 months correlation between Floating and Investec is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Floating Rate Fund and Investec Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Emerging Markets and Floating Rate 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 Floating Rate Fund are associated (or correlated) with Investec Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Emerging Markets has no effect on the direction of Floating Rate i.e., Floating Rate and Investec Emerging go up and down completely randomly.

Pair Corralation between Floating Rate and Investec Emerging

Assuming the 90 days horizon Floating Rate is expected to generate 3.84 times less return on investment than Investec Emerging. But when comparing it to its historical volatility, Floating Rate Fund is 4.96 times less risky than Investec Emerging. It trades about 0.26 of its potential returns per unit of risk. Investec Emerging Markets is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,173  in Investec Emerging Markets on May 10, 2025 and sell it today you would earn a total of  110.00  from holding Investec Emerging Markets or generate 9.38% return on investment over 90 days.

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

Floating Rate Fund  vs.  Investec Emerging Markets

Floating Rate

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Floating Rate Fund are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Floating Rate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Investec Emerging Markets

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Investec Emerging Markets are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Investec Emerging may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Floating Rate and Investec Emerging

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

The idea behind Floating Rate Fund and Investec 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.