Correlation Between Emerging Markets and Us Defensive

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

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

Diversification Opportunities for Emerging Markets and Us Defensive

0.0

Correlation Coefficient

Emerging Markets  Us Defensive

Pay attention - limited upside

The 3 months correlation between Emerging and REQAX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Fund and Us Defensive Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Defensive Equity 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 Emerging Markets Fund are associated (or correlated) with Us Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Defensive Equity has no effect on the direction of Emerging Markets i.e., Emerging Markets and Us Defensive go up and down completely randomly.

Pair Corralation between Emerging Markets and Us Defensive

If you would invest  1,940  in Emerging Markets Fund on August 26, 2025 and sell it today you would earn a total of  96.00  from holding Emerging Markets Fund or generate 4.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Emerging Markets Fund  vs.  Us Defensive Equity

Emerging Markets

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Emerging Markets Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Emerging Markets is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Us Defensive Equity

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Us Defensive Equity are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Us Defensive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Emerging Markets and Us Defensive

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

The idea behind Emerging Markets Fund and Us Defensive Equity 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 CEOs Directory module to screen CEOs from public companies around the world.