Correlation Between Emerging Markets and Emerging Europe
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Emerging Europe 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 Emerging Markets and Emerging Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Fund and Emerging Europe Fund, you can compare the effects of market volatilities on Emerging Markets and Emerging Europe 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 Emerging Markets with a short position of Emerging Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Emerging Europe.
Diversification Opportunities for Emerging Markets and Emerging Europe
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Emerging and Emerging is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Fund and Emerging Europe Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Europe and Emerging Markets 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 Emerging Markets Fund are associated (or correlated) with Emerging Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Europe has no effect on the direction of Emerging Markets i.e., Emerging Markets and Emerging Europe go up and down completely randomly.
Pair Corralation between Emerging Markets and Emerging Europe
If you would invest 954.00 in Emerging Markets Fund on September 4, 2024 and sell it today you would earn a total of 202.00 from holding Emerging Markets Fund or generate 21.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.34% |
| Values | Daily Returns |
Emerging Markets Fund vs. Emerging Europe Fund
Performance |
| Timeline |
| Emerging Markets |
| Emerging Europe |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Emerging Markets and Emerging Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Emerging Europe
The main advantage of trading using opposite Emerging Markets and Emerging Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Emerging Europe 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 Europe will offset losses from the drop in Emerging Europe's long position.| Emerging Markets vs. International Growth Fund | Emerging Markets vs. Value Fund I | Emerging Markets vs. Mfs International New | Emerging Markets vs. Heritage Fund I |
| Emerging Europe vs. Qs Large Cap | Emerging Europe vs. Dana Large Cap | Emerging Europe vs. Vela Large Cap | Emerging Europe vs. Dodge Cox Stock |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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