Correlation Between Emerging Markets and Small Pany
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Small Pany 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 Small Pany 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 Small Pany Fund, you can compare the effects of market volatilities on Emerging Markets and Small Pany 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 Small Pany. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Small Pany.
Diversification Opportunities for Emerging Markets and Small Pany
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Emerging and Small is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Fund and Small Pany Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pany Fund 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 Small Pany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pany Fund has no effect on the direction of Emerging Markets i.e., Emerging Markets and Small Pany go up and down completely randomly.
Pair Corralation between Emerging Markets and Small Pany
Assuming the 90 days horizon Emerging Markets Fund is expected to generate 0.69 times more return on investment than Small Pany. However, Emerging Markets Fund is 1.45 times less risky than Small Pany. It trades about 0.32 of its potential returns per unit of risk. Small Pany Fund is currently generating about 0.21 per unit of risk. If you would invest 1,150 in Emerging Markets Fund on April 27, 2025 and sell it today you would earn a total of 175.00 from holding Emerging Markets Fund or generate 15.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerging Markets Fund vs. Small Pany Fund
Performance |
| Timeline |
| Emerging Markets |
| Small Pany Fund |
Emerging Markets and Small Pany Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Small Pany
The main advantage of trading using opposite Emerging Markets and Small Pany positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Small Pany 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 Small Pany will offset losses from the drop in Small Pany'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 |
| Small Pany vs. Small Cap Value | Small Pany vs. Real Estate Fund | Small Pany vs. Emerging Markets Fund | Small Pany vs. Equity Growth Fund |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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