Correlation Between Emerging Europe and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Emerging Europe 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 Europe 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 Europe Fund and Emerging Markets Fund, you can compare the effects of market volatilities on Emerging Europe 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 Europe with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Europe and Emerging Markets.
Diversification Opportunities for Emerging Europe and Emerging Markets
-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 Europe Fund 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 Europe 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 Europe Fund 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 Europe i.e., Emerging Europe and Emerging Markets go up and down completely randomly.
Pair Corralation between Emerging Europe and Emerging Markets
Assuming the 90 days horizon Emerging Europe Fund is expected to generate 1.47 times more return on investment than Emerging Markets. However, Emerging Europe is 1.47 times more volatile than Emerging Markets Fund. It trades about 0.04 of its potential returns per unit of risk. Emerging Markets Fund is currently generating about 0.05 per unit of risk. If you would invest 400.00 in Emerging Europe Fund on September 4, 2024 and sell it today you would earn a total of 5.00 from holding Emerging Europe Fund or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 8.04% |
| Values | Daily Returns |
Emerging Europe Fund vs. Emerging Markets Fund
Performance |
| Timeline |
| Emerging Europe |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Emerging Markets |
Emerging Europe and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Europe and Emerging Markets
The main advantage of trading using opposite Emerging Europe and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Europe 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.| Emerging Europe vs. Qs Large Cap | Emerging Europe vs. Dana Large Cap | Emerging Europe vs. Vela Large Cap | Emerging Europe vs. Dodge Cox Stock |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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