Correlation Between Ab Concentrated and Emerging Markets

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

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

Diversification Opportunities for Ab Concentrated and Emerging Markets

0.66

Correlation Coefficient

Ab Concentrated  Emerging Markets

Poor diversification

The 3 months correlation between WPASX and Emerging is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ab Centrated Growth and Emerging Markets Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Equity and Ab Concentrated 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 Ab Centrated Growth are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Equity has no effect on the direction of Ab Concentrated i.e., Ab Concentrated and Emerging Markets go up and down completely randomly.

Pair Corralation between Ab Concentrated and Emerging Markets

Assuming the 90 days horizon Ab Concentrated is expected to generate 1.34 times less return on investment than Emerging Markets. In addition to that, Ab Concentrated is 1.11 times more volatile than Emerging Markets Equity. It trades about 0.14 of its total potential returns per unit of risk. Emerging Markets Equity is currently generating about 0.2 per unit of volatility. If you would invest  1,425  in Emerging Markets Equity on May 7, 2025 and sell it today you would earn a total of  128.00  from holding Emerging Markets Equity or generate 8.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.16%
Values	Daily Returns

Ab Centrated Growth  vs.  Emerging Markets Equity

Ab Centrated Growth

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Centrated Growth are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ab Concentrated may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Emerging Markets Equity

Risk-Adjusted Performance

Solid

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

Pair Trading with Ab Concentrated and Emerging Markets

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

The idea behind Ab Centrated Growth and Emerging Markets Equity 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.