Frontier Stock Market Correlations for 2016


We took a look at the correlations between global stock markets for 2016. The previous 12 months have been busy, with Brexit, a US rate hike, and the diverging fortunes of gold and oil just a few of the headlines we’ve seen. We’ve calculated realized correlations for global stock markets for 4 years now; feel free to compare this year’s results with previous years in 2015, 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 up significantly in developed markets over the past 12 months
  • This is possibly due to the markets moving back to a “Risk-on / Risk-off” basis where if the news is good, stocks are bought everywhere, and vice versa, with less emphasis on individual market stories
  • Frontier markets remain the best place to find markets uncorrelated with the rest of the market
  • The average correlations for frontier markets mask a large range of correlations for each individual 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 between other developed markets are all back above 0.50 now
  • China and Russia remain the least correlated to other markets, but are still more correlated in 2016 than they were in 2015

African Frontier Stock Market Correlation

  • African frontier stock markets’ correlation to developed markets have dropped in 2016 to become the least correlated markets in the world
  • Malawi continues to stand out as a market negatively correlated to the US, although almost every market except for Namibia and Zimbabwe is almost uncorrelated to the US as well

Central & Latin American Frontier Stock Market Correlation

  • Correlations are all over the place with more developed countries like Chile and Colombia more correlated to the US to island nations and less developed countries
  • Chile has a higher GDP per capita than either Mexico or Brazil, so the high correlation to developed markets is not that surprising
  • Panama is negatively correlated to both the US and Europe, making it a decent safe haven market
  • In fact for investors looking to diversify away from large European equity holdings, Colombia and Panama offer an interesting opportunity
  • Trinidad and Venezuela are not highly correlated with any market – except each other, although that is likely due to process of elimination and a good example of correlation not meaning causation

European & Central Asian Frontier Stock Market Correlation

  • Frontier Europe continues to be less correlated to developed Europe than you would expect; Bosnia, Bulgaria, Cyprus, Macedonia, Malta, and Ukraine are almost uncorrelated to Europe
  • Romania, Slovenia, and Croatia are the most correlated to developed markets
  • Bosnia stands out as the European frontier market least correlated to the rest of the world

Middle Eastern Frontier Stock Market Correlation

  • Middle Eastern Frontier stock markets’ correlation to the rest of the world has been the most steady over the past year
  • Egypt, Kuwait, and Saudi Arabia have the strongest correlation to the developed markets with correlations above 0.30
  • Iraq continues to be 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 both the developed world and the MSCI FM index, lead mostly by the Philippines and Vietnam
  • Cambodia was negatively correlated to most other countries
  • The correlation between India, Pakistan, and Sri Lanka is much higher this year

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