Correlation Between Emerging Markets and Environment

Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Environment 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 Environment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Emerging Markets and Environment And Alternative, you can compare the effects of market volatilities on Emerging Markets and Environment 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 Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Environment.

Diversification Opportunities for Emerging Markets and Environment

0.96

Correlation Coefficient

Emerging Markets  Environment

Almost no diversification

The 3 months correlation between Emerging and Environment is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding The Emerging Markets and Environment And Alternative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Environment And Alte 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 The Emerging Markets are associated (or correlated) with Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Environment And Alte has no effect on the direction of Emerging Markets i.e., Emerging Markets and Environment go up and down completely randomly.

Pair Corralation between Emerging Markets and Environment

Assuming the 90 days horizon The Emerging Markets is expected to generate 1.02 times more return on investment than Environment. However, Emerging Markets is 1.02 times more volatile than Environment And Alternative. It trades about 0.18 of its potential returns per unit of risk. Environment And Alternative is currently generating about 0.16 per unit of risk. If you would invest  2,133  in The Emerging Markets on May 27, 2025 and sell it today you would earn a total of  211.00  from holding The Emerging Markets or generate 9.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

The Emerging Markets  vs.  Environment And Alternative

Emerging Markets

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Emerging Markets are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Emerging Markets may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Environment And Alte

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Environment And Alternative are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Environment may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Emerging Markets and Environment

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

The idea behind The Emerging Markets and Environment And Alternative 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.