Correlation Between VanEck Emerging and Global X

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

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

Diversification Opportunities for VanEck Emerging and Global X

0.86

Correlation Coefficient

VanEck Emerging  Global X

Very poor diversification

The 3 months correlation between VanEck and Global is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Emerging Markets and Global X Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Emerging and VanEck 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 VanEck Emerging Markets are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Emerging has no effect on the direction of VanEck Emerging i.e., VanEck Emerging and Global X go up and down completely randomly.

Pair Corralation between VanEck Emerging and Global X

Given the investment horizon of 90 days VanEck Emerging Markets is expected to generate about the same return on investment as Global X Emerging. But, VanEck Emerging Markets is 1.2 times less risky than Global X. It trades about 0.14 of its potential returns per unit of risk. Global X Emerging is currently generating about 0.12 per unit of risk. If you would invest  2,244  in Global X Emerging on December 20, 2024 and sell it today you would earn a total of  58.00  from holding Global X Emerging or generate 2.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

VanEck Emerging Markets  vs.  Global X Emerging

VanEck Emerging Markets

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Emerging Markets are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, VanEck Emerging is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Global X Emerging

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Emerging are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Global X is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with VanEck Emerging and Global X

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

The idea behind VanEck Emerging Markets and Global X Emerging 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..