Correlation Between Emerging Markets and Global Strategist
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Global Strategist 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 Global Strategist into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Equity and Global Strategist Portfolio, you can compare the effects of market volatilities on Emerging Markets and Global Strategist 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 Global Strategist. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Global Strategist.
Diversification Opportunities for Emerging Markets and Global Strategist
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Emerging and Global is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Equity and Global Strategist Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Strategist 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 Equity are associated (or correlated) with Global Strategist. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Strategist has no effect on the direction of Emerging Markets i.e., Emerging Markets and Global Strategist go up and down completely randomly.
Pair Corralation between Emerging Markets and Global Strategist
Assuming the 90 days horizon Emerging Markets Equity is expected to under-perform the Global Strategist. In addition to that, Emerging Markets is 2.07 times more volatile than Global Strategist Portfolio. It trades about -0.16 of its total potential returns per unit of risk. Global Strategist Portfolio is currently generating about 0.27 per unit of volatility. If you would invest 1,704 in Global Strategist Portfolio on September 1, 2024 and sell it today you would earn a total of 40.00 from holding Global Strategist Portfolio or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerging Markets Equity vs. Global Strategist Portfolio
Performance |
| Timeline |
| Emerging Markets Equity |
| Global Strategist |
Emerging Markets and Global Strategist Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Global Strategist
The main advantage of trading using opposite Emerging Markets and Global Strategist positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Global Strategist 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 Global Strategist will offset losses from the drop in Global Strategist's long position.| Emerging Markets vs. International Equity Portfolio | Emerging Markets vs. Municipal Bond Fund | Emerging Markets vs. Global Advantage Portfolio | Emerging Markets vs. Advantage Portfolio Class |
| Global Strategist vs. Emerging Markets Equity | Global Strategist vs. Global Fixed Income | Global Strategist vs. Global Fixed Income | Global Strategist vs. Global Fixed Income |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |