Below is a calculation of the cross-sectional standard deviation of returns across the universe of emerging market ETF’s (shown as a five-day moving average).
![What systemic risk](https://i0.wp.com/static.atimes.com/uploads/2018/07/What-systemic-risk.png?resize=764%2C561)
The degree of diversification as gauged by the dispersion of daily returns is at or close to a multi-year high. This is due to a combination of
- Idiosyncratic factors, such as politics in Brazil and Turkey;
- Different responses to shocks, e.g. the threat of trade war; and
- Different responses to tighter monetary conditions.
That said, the larger EM equity ETF’s have been trending in the same direction, as the chart below shows.
![EM ETFs](https://i0.wp.com/static.atimes.com/uploads/2018/07/EM-ETFs.png?resize=477%2C420)