Frontier Stock Market Correlations for 2015


One of the main reasons for investing in frontier market equities is to take advantage of reduced correlations with more developed equity markets.  This is a key feature for anyone organizing their own diversified global portfolio, and one of the few ways investors can reliably augment their returns. We take a look at frontier stock market correlations with developed and emerging markets every year (see how these correlations have shifted since 2014 and 2013).

We use 36-month, monthly correlations to calculate our correlations.  We’ve embedded most of the correlations with Excel Online, and you can download our data with the button right beneath the embedded window.



  • Global stock correlations have gone down significantly in 2015, even in emerging markets
  • This is possibly due to QE’s impact fading out, especially with the US being the sole country contemplating raising rates while the rest of the world continues to ease
  • There may also be more of a focus on local issues with “easy” returns gone and a flight to safety impacting emerging markets a lot, with Russia and China the best examples
  • Frontier markets remain the best place to find markets uncorrelated with the rest of the market

Developing and Emerging Market Correlations

  • We look at correlations between developing and emerging markets first to establish a baseline of comparison for frontier markets
  • Correlations to the US markets outside of North America and Europe are all below 0.500 now with the exception of the MSCI EM index
  • Correlations in Russia and China have gone almost to zero, with sanctions and state interventions a likely cause

African Frontier Stock Market Correlation

  • Oddly enough, Africa as a whole had the highest correlation to the US, albeit only a 0.235 correlation so less than half that of developed markets
  • Zimbabwe, Kenya, Uganda, and Nigeria led the way as the most correlated with the US and Europe
  • Malawi stands out as negatively correlated to the US, with Cote D’Ivoire, Tanzania, and Zambia only around 0.10 correlation

Central & Latin American Frontier Stock Market Correlation

  • Despite the closer proximity to the US (which helped boost correlations in previous years), correlations here have also plummeted vs the US
  • EM Latin America (Brazil and Mexico) had correlations above 0.40, while the more developed frontier markets like Chile and Colombia hovered above 0.30
  • As expected, smaller countries and less developed ones were the least correlated, with Jamaica standing out with a negative correlation, and Argentina, Panama, and Peru also very uncorrelated to the US
  • Many of the smaller nations like Jamaica, Panama, and Trinidad and Tobago were uncorrelated not just with the US, but with other countries in the region

European & Central Asian Frontier Stock Market Correlation

  • Surprisingly, this was the least correlated region to the US, and only had a less than 0.10 correlation to Europe
  • Malta, Slovakia, and Bosnia & Herzegovina stood out with negative correlations to the US, and almost no correlation to Europe
  • Cyprus, Macedonia, and Mongolia were also almost uncorrelated to developed markets

Middle Eastern Frontier Stock Market Correlation

  • Kuwait and Saudi Arabia were the most correlated to the US at over 0.35
  • Iraq is perhaps the least correlated market to the rest of the world, with negative correlations against all the other countries in the same region

Asia Frontier Stock Market Correlation

  • Asia is the most correlated region to the overall MSCI FM Index, due mostly to the Philippines and Vietnam
  • Cambodia was negatively correlated to most other countries, even to nearby Laos
  • Pakistan was also surprisingly uncorrelated with India despite proximity


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