Correlation Between Rbc Emerging and Investec Emerging

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

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

Diversification Opportunities for Rbc Emerging and Investec Emerging

0.98

Correlation Coefficient

Rbc Emerging  Investec Emerging

Almost no diversification

The 3 months correlation between Rbc and Investec is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Rbc Emerging Markets 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 Rbc 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 Rbc Emerging Markets 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 Rbc Emerging i.e., Rbc Emerging and Investec Emerging go up and down completely randomly.

Pair Corralation between Rbc Emerging and Investec Emerging

Assuming the 90 days horizon Rbc Emerging Markets is expected to generate 1.08 times more return on investment than Investec Emerging. However, Rbc Emerging is 1.08 times more volatile than Investec Emerging Markets. It trades about 0.07 of its potential returns per unit of risk. Investec Emerging Markets is currently generating about 0.05 per unit of risk. If you would invest  833.00  in Rbc Emerging Markets on February 3, 2024 and sell it today you would earn a total of  13.00  from holding Rbc Emerging Markets or generate 1.56% return on investment over 90 days.

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

Rbc Emerging Markets  vs.  Investec Emerging Markets

Rbc Emerging Markets

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rbc Emerging Markets are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rbc Emerging may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Investec Emerging Markets

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Investec Emerging Markets are ranked lower than 15 (%) 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 June 2024.

Pair Trading with Rbc Emerging and Investec Emerging

The main advantage of trading using opposite Rbc Emerging and Investec Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rbc Emerging 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 Rbc Emerging Markets 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.