Correlation Between Amundi MSCI and Nomura Funds

Can any of the company-specific risk be diversified away by investing in both Amundi MSCI and Nomura Funds 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 Amundi MSCI and Nomura Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amundi MSCI UK and Nomura Funds Ireland, you can compare the effects of market volatilities on Amundi MSCI and Nomura Funds 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 Amundi MSCI with a short position of Nomura Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amundi MSCI and Nomura Funds.

Diversification Opportunities for Amundi MSCI and Nomura Funds

0.28

Correlation Coefficient

Amundi MSCI  Nomura Funds

Modest diversification

The 3 months correlation between Amundi and Nomura is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Amundi MSCI UK and Nomura Funds Ireland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Funds Ireland and Amundi MSCI 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 Amundi MSCI UK are associated (or correlated) with Nomura Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Funds Ireland has no effect on the direction of Amundi MSCI i.e., Amundi MSCI and Nomura Funds go up and down completely randomly.

Pair Corralation between Amundi MSCI and Nomura Funds

Assuming the 90 days trading horizon Amundi MSCI UK is expected to generate 0.99 times more return on investment than Nomura Funds. However, Amundi MSCI UK is 1.01 times less risky than Nomura Funds. It trades about -0.17 of its potential returns per unit of risk. Nomura Funds Ireland is currently generating about -0.32 per unit of risk. If you would invest  122,028  in Amundi MSCI UK on October 1, 2024 and sell it today you would lose (2,507) from holding Amundi MSCI UK or give up 2.05% of portfolio value over 90 days.

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

Amundi MSCI UK  vs.  Nomura Funds Ireland

Amundi MSCI UK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amundi MSCI UK has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively invariable basic indicators, Amundi MSCI is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Nomura Funds Ireland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nomura Funds Ireland has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, Nomura Funds is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Amundi MSCI and Nomura Funds

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

The idea behind Amundi MSCI UK and Nomura Funds Ireland 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.