Correlation Between Amana Developing and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Amana Developing 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 Amana Developing and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amana Developing World and Emerging Markets Portfolio, you can compare the effects of market volatilities on Amana Developing 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 Amana Developing with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amana Developing and Emerging Markets.
Diversification Opportunities for Amana Developing and Emerging Markets
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Amana and Emerging is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Amana Developing World and Emerging Markets Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Por and Amana Developing 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 Amana Developing World 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 Por has no effect on the direction of Amana Developing i.e., Amana Developing and Emerging Markets go up and down completely randomly.
Pair Corralation between Amana Developing and Emerging Markets
Assuming the 90 days horizon Amana Developing World is expected to under-perform the Emerging Markets. But the mutual fund apears to be less risky and, when comparing its historical volatility, Amana Developing World is 1.1 times less risky than Emerging Markets. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Emerging Markets Portfolio is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 2,807 in Emerging Markets Portfolio on January 18, 2024 and sell it today you would lose (32.00) from holding Emerging Markets Portfolio or give up 1.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amana Developing World vs. Emerging Markets Portfolio
Performance |
| Timeline |
| Amana Developing World |
| Emerging Markets Por |
Amana Developing and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amana Developing and Emerging Markets
The main advantage of trading using opposite Amana Developing and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amana Developing 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.| Amana Developing vs. Amana Income Fund | Amana Developing vs. Amana Growth Fund | Amana Developing vs. Amana Participation Fund | Amana Developing vs. Azzad Ethical Fund |
| Emerging Markets vs. Intal High Relative | Emerging Markets vs. Dfa International | Emerging Markets vs. Dfa Inflation Protected | Emerging Markets vs. Dfa International Small |
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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