Correlation Between T Rowe and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both T Rowe 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 T Rowe and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Rowe Price and Emerging Markets Portfolio, you can compare the effects of market volatilities on T Rowe 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 T Rowe with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Emerging Markets.
Diversification Opportunities for T Rowe and Emerging Markets
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TRFZX and Emerging is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Emerging Markets Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Por and T Rowe 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 T Rowe Price 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 Por has no effect on the direction of T Rowe i.e., T Rowe and Emerging Markets go up and down completely randomly.
Pair Corralation between T Rowe and Emerging Markets
Assuming the 90 days horizon T Rowe Price is expected to generate 1.05 times more return on investment than Emerging Markets. However, T Rowe is 1.05 times more volatile than Emerging Markets Portfolio. It trades about 0.22 of its potential returns per unit of risk. Emerging Markets Portfolio is currently generating about 0.17 per unit of risk. If you would invest 1,496 in T Rowe Price on May 31, 2025 and sell it today you would earn a total of 161.00 from holding T Rowe Price or generate 10.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
T Rowe Price vs. Emerging Markets Portfolio
Performance |
| Timeline |
| T Rowe Price |
| Emerging Markets Por |
T Rowe and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Rowe and Emerging Markets
The main advantage of trading using opposite T Rowe and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe 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.| T Rowe vs. Allianzgi Technology Fund | T Rowe vs. Columbia Global Technology | T Rowe vs. Dreyfus Technology Growth | T Rowe vs. Red Oak Technology |
| Emerging Markets vs. Emerging Markets Equity | Emerging Markets vs. Global Fixed Income | Emerging Markets vs. Global Fixed Income | Emerging Markets 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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |