Correlation Between Ep Emerging and Mmzbx

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

By analyzing existing cross correlation between Ep Emerging Markets and Mmzbx, you can compare the effects of market volatilities on Ep Emerging and Mmzbx 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 Ep Emerging with a short position of Mmzbx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ep Emerging and Mmzbx.

Diversification Opportunities for Ep Emerging and Mmzbx

0.35

Correlation Coefficient

Ep Emerging  Mmzbx

Weak diversification

The 3 months correlation between EPEIX and Mmzbx is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ep Emerging Markets and Mmzbx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mmzbx and Ep Emerging 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 Ep Emerging Markets are associated (or correlated) with Mmzbx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mmzbx has no effect on the direction of Ep Emerging i.e., Ep Emerging and Mmzbx go up and down completely randomly.

Pair Corralation between Ep Emerging and Mmzbx

Assuming the 90 days horizon Ep Emerging Markets is expected to under-perform the Mmzbx. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ep Emerging Markets is 4.29 times less risky than Mmzbx. The mutual fund trades about -0.27 of its potential returns per unit of risk. The Mmzbx is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,207  in Mmzbx on October 6, 2024 and sell it today you would lose (1.00) from holding Mmzbx or give up 0.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Ep Emerging Markets  vs.  Mmzbx

Ep Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ep Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Mmzbx

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Ep Emerging and Mmzbx

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

The idea behind Ep Emerging Markets and Mmzbx 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.