Correlation Between MAYBANK EMERGING and Global X

Can any of the company-specific risk be diversified away by investing in both MAYBANK 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 MAYBANK 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 MAYBANK EMERGING ETF and Global X MSCI, you can compare the effects of market volatilities on MAYBANK 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 MAYBANK EMERGING with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAYBANK EMERGING and Global X.

Diversification Opportunities for MAYBANK EMERGING and Global X

0.69

Correlation Coefficient

MAYBANK EMERGING  Global X

Poor diversification

The 3 months correlation between MAYBANK and Global is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding MAYBANK EMERGING ETF and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI and MAYBANK 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 MAYBANK EMERGING ETF 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 MSCI has no effect on the direction of MAYBANK EMERGING i.e., MAYBANK EMERGING and Global X go up and down completely randomly.

Pair Corralation between MAYBANK EMERGING and Global X

Considering the 90-day investment horizon MAYBANK EMERGING is expected to generate 4.68 times less return on investment than Global X. In addition to that, MAYBANK EMERGING is 1.32 times more volatile than Global X MSCI. It trades about 0.05 of its total potential returns per unit of risk. Global X MSCI is currently generating about 0.29 per unit of volatility. If you would invest  1,386  in Global X MSCI on December 27, 2024 and sell it today you would earn a total of  220.00  from holding Global X MSCI or generate 15.87% return on investment over 90 days.

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

MAYBANK EMERGING ETF  vs.  Global X MSCI

MAYBANK EMERGING ETF

Risk-Adjusted Performance

Insignificant

Over the last 90 days MAYBANK EMERGING ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, MAYBANK EMERGING is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Global X MSCI

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X MSCI are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Global X unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MAYBANK EMERGING and Global X

The main advantage of trading using opposite MAYBANK EMERGING and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAYBANK 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 MAYBANK EMERGING ETF and Global X MSCI 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.