Correlation Between Multi Asset and Investec Emerging

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

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

Diversification Opportunities for Multi Asset and Investec Emerging

0.99

Correlation Coefficient

Multi Asset  Investec Emerging

No risk reduction

The 3 months correlation between Multi and Investec is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Multi Asset Growth Strategy 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 Multi Asset 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 Multi Asset Growth Strategy 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 Multi Asset i.e., Multi Asset and Investec Emerging go up and down completely randomly.

Pair Corralation between Multi Asset and Investec Emerging

Assuming the 90 days horizon Multi Asset is expected to generate 1.95 times less return on investment than Investec Emerging. But when comparing it to its historical volatility, Multi Asset Growth Strategy is 1.89 times less risky than Investec Emerging. It trades about 0.28 of its potential returns per unit of risk. Investec Emerging Markets is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  1,119  in Investec Emerging Markets on May 1, 2025 and sell it today you would earn a total of  153.00  from holding Investec Emerging Markets or generate 13.67% return on investment over 90 days.

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

Multi Asset Growth Strategy  vs.  Investec Emerging Markets

Multi Asset Growth

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Asset Growth Strategy are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Multi Asset may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Investec Emerging showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Multi Asset and Investec Emerging

The main advantage of trading using opposite Multi Asset and Investec Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Asset 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 Multi Asset Growth Strategy 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.