Correlation Between Amundi MSCI and Amundi MSCI

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

By analyzing existing cross correlation between Amundi MSCI USA and Amundi MSCI Pacific, you can compare the effects of market volatilities on Amundi MSCI and Amundi MSCI 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 Amundi MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amundi MSCI and Amundi MSCI.

Diversification Opportunities for Amundi MSCI and Amundi MSCI

0.7

Correlation Coefficient

Amundi MSCI  Amundi MSCI

Poor diversification

The 3 months correlation between Amundi and Amundi is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Amundi MSCI USA and Amundi MSCI Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi MSCI Pacific 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 USA are associated (or correlated) with Amundi MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi MSCI Pacific has no effect on the direction of Amundi MSCI i.e., Amundi MSCI and Amundi MSCI go up and down completely randomly.

Pair Corralation between Amundi MSCI and Amundi MSCI

Assuming the 90 days trading horizon Amundi MSCI USA is expected to under-perform the Amundi MSCI. But the etf apears to be less risky and, when comparing its historical volatility, Amundi MSCI USA is 1.04 times less risky than Amundi MSCI. The etf trades about -0.07 of its potential returns per unit of risk. The Amundi MSCI Pacific is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  68,409  in Amundi MSCI Pacific on December 4, 2024 and sell it today you would lose (2,251) from holding Amundi MSCI Pacific or give up 3.29% of portfolio value over 90 days.

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

Amundi MSCI USA  vs.  Amundi MSCI Pacific

Amundi MSCI USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amundi MSCI USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Amundi MSCI is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Amundi MSCI Pacific

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amundi MSCI Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Amundi MSCI is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Amundi MSCI and Amundi MSCI

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

The idea behind Amundi MSCI USA and Amundi MSCI Pacific 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.