Correlation Between Largecap and Ep Emerging
Can any of the company-specific risk be diversified away by investing in both Largecap and Ep Emerging 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 Largecap and Ep Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Largecap Sp 500 and Ep Emerging Markets, you can compare the effects of market volatilities on Largecap and Ep Emerging 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 Largecap with a short position of Ep Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Largecap and Ep Emerging.
Diversification Opportunities for Largecap and Ep Emerging
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Largecap and EPEIX is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Largecap Sp 500 and Ep Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ep Emerging Markets and Largecap 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 Largecap Sp 500 are associated (or correlated) with Ep Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ep Emerging Markets has no effect on the direction of Largecap i.e., Largecap and Ep Emerging go up and down completely randomly.
Pair Corralation between Largecap and Ep Emerging
Assuming the 90 days horizon Largecap is expected to generate 1.19 times less return on investment than Ep Emerging. In addition to that, Largecap is 1.03 times more volatile than Ep Emerging Markets. It trades about 0.25 of its total potential returns per unit of risk. Ep Emerging Markets is currently generating about 0.31 per unit of volatility. If you would invest 1,071 in Ep Emerging Markets on May 28, 2025 and sell it today you would earn a total of 124.00 from holding Ep Emerging Markets or generate 11.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Largecap Sp 500 vs. Ep Emerging Markets
Performance |
| Timeline |
| Largecap Sp 500 |
| Ep Emerging Markets |
Largecap and Ep Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Largecap and Ep Emerging
The main advantage of trading using opposite Largecap and Ep Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Largecap position performs unexpectedly, Ep Emerging 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 Ep Emerging will offset losses from the drop in Ep Emerging's long position.| Largecap vs. Shelton Emerging Markets | Largecap vs. Doubleline Emerging Markets | Largecap vs. Ashmore Emerging Markets | Largecap vs. Investec Emerging Markets |
| Ep Emerging vs. Foundry Partners Fundamental | Ep Emerging vs. Lebenthal Lisanti Small | Ep Emerging vs. Qs Small Capitalization | Ep Emerging vs. Siit Small Cap |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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