Correlation Between Emrg Mkts and FTSE EM

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Emrg Mkts and FTSE EM 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 Emrg Mkts and FTSE EM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emrg Mkts Ishares and FTSE EM ETF, you can compare the effects of market volatilities on Emrg Mkts and FTSE EM 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 Emrg Mkts with a short position of FTSE EM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emrg Mkts and FTSE EM.

Diversification Opportunities for Emrg Mkts and FTSE EM

0.99
  Correlation Coefficient

No risk reduction

The 3 months correlation between Emrg Mkts and FTSE EM is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Emrg Mkts Ishares and FTSE EM ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTSE EM ETF and Emrg Mkts 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 Emrg Mkts Ishares are associated (or correlated) with FTSE EM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTSE EM ETF has no effect on the direction of Emrg Mkts i.e., Emrg Mkts and FTSE EM go up and down completely randomly.

Pair Corralation between Emrg Mkts and FTSE EM

Given the investment horizon of 90 days Emrg Mkts is expected to generate 1.23 times less return on investment than FTSE EM. In addition to that, Emrg Mkts is 1.01 times more volatile than FTSE EM ETF. It trades about 0.01 of its total potential returns per unit of risk. FTSE EM ETF is currently generating about 0.01 per unit of volatility. If you would invest  4,092  in FTSE EM ETF on April 1, 2022 and sell it today you would earn a total of  62.00  from holding FTSE EM ETF or generate 1.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Emrg Mkts Ishares  vs.  FTSE EM ETF

 Performance (%) 
      Timeline 
Emrg Mkts Ishares 
Emrg Mkts Performance
0 of 100
Over the last 90 days Emrg Mkts Ishares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Emrg Mkts Price Channel

FTSE EM ETF 
FTSE EM Performance
0 of 100
Over the last 90 days FTSE EM ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

FTSE EM Price Channel

Emrg Mkts and FTSE EM Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Emrg Mkts and FTSE EM

The main advantage of trading using opposite Emrg Mkts and FTSE EM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emrg Mkts position performs unexpectedly, FTSE EM 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 FTSE EM will offset losses from the drop in FTSE EM's long position.

Emrg Mkts Ishares

Pair trading matchups for Emrg Mkts

The idea behind Emrg Mkts Ishares and FTSE EM ETF pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

FTSE EM ETF

Pair trading matchups for FTSE EM

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

Other Complementary Tools

Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Go
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Go
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Go
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Go
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Go
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Go
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Go
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Go
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Go