Correlation Between Emerging Markets and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Emerging Markets 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 Emerging Markets and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Growth and Emerging Markets Fund, you can compare the effects of market volatilities on Emerging Markets 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 Emerging Markets with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Emerging Markets.
Diversification Opportunities for Emerging Markets and Emerging Markets
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Emerging and Emerging is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Growth and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets 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 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 has no effect on the direction of Emerging Markets i.e., Emerging Markets and Emerging Markets go up and down completely randomly.
Pair Corralation between Emerging Markets and Emerging Markets
Assuming the 90 days horizon Emerging Markets Growth is expected to under-perform the Emerging Markets. But the mutual fund apears to be less risky and, when comparing its historical volatility, Emerging Markets Growth is 1.24 times less risky than Emerging Markets. The mutual fund trades about -0.23 of its potential returns per unit of risk. The Emerging Markets Fund is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 1,221 in Emerging Markets Fund on September 3, 2024 and sell it today you would lose (74.00) from holding Emerging Markets Fund or give up 6.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerging Markets Growth vs. Emerging Markets Fund
Performance |
| Timeline |
| Emerging Markets Growth |
| Emerging Markets |
Emerging Markets and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Emerging Markets
The main advantage of trading using opposite Emerging Markets and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets 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 Emerging Markets Growth and Emerging Markets Fund 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.| Emerging Markets vs. International Growth Fund | Emerging Markets vs. Value Fund I | Emerging Markets vs. Mfs International New | Emerging Markets vs. Heritage Fund I |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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