Correlation Between Global E and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Global E 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 Global E and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global E Portfolio and Emerging Markets Equity, you can compare the effects of market volatilities on Global E 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 Global E with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global E and Emerging Markets.
Diversification Opportunities for Global E and Emerging Markets
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Emerging is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Global E Portfolio and Emerging Markets Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Equity and Global E 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 Global E Portfolio 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 Equity has no effect on the direction of Global E i.e., Global E and Emerging Markets go up and down completely randomly.
Pair Corralation between Global E and Emerging Markets
Assuming the 90 days horizon Global E is expected to generate 5.25 times less return on investment than Emerging Markets. In addition to that, Global E is 1.01 times more volatile than Emerging Markets Equity. It trades about 0.04 of its total potential returns per unit of risk. Emerging Markets Equity is currently generating about 0.21 per unit of volatility. If you would invest 1,587 in Emerging Markets Equity on September 4, 2025 and sell it today you would earn a total of 169.00 from holding Emerging Markets Equity or generate 10.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global E Portfolio vs. Emerging Markets Equity
Performance |
| Timeline |
| Global E Portfolio |
| Emerging Markets Equity |
Global E and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global E and Emerging Markets
The main advantage of trading using opposite Global E and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global E 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.| Global E vs. Putnam Global Health | Global E vs. Hartford Healthcare Hls | Global E vs. Tekla Healthcare Investors | Global E vs. Lord Abbett Health |
| Emerging Markets vs. Franklin Emerging Market | Emerging Markets vs. Vanguard High Yield Tax Exempt | Emerging Markets vs. Arrow Managed Futures | Emerging Markets vs. Semiconductor Ultrasector Profund |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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