Correlation Between Msif International and Msif Advantage

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

By analyzing existing cross correlation between Msif International Advantage and Msif Advantage Port, you can compare the effects of market volatilities on Msif International and Msif Advantage 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 Msif International with a short position of Msif Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Msif International and Msif Advantage.

Diversification Opportunities for Msif International and Msif Advantage

0.56

Correlation Coefficient

Msif International  Msif Advantage

Very weak diversification

The 3 months correlation between Msif and Msif is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Msif International Advantage and Msif Advantage Port in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Msif Advantage Port and Msif International 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 Msif International Advantage are associated (or correlated) with Msif Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Msif Advantage Port has no effect on the direction of Msif International i.e., Msif International and Msif Advantage go up and down completely randomly.

Pair Corralation between Msif International and Msif Advantage

Assuming the 90 days horizon Msif International Advantage is expected to generate 0.68 times more return on investment than Msif Advantage. However, Msif International Advantage is 1.47 times less risky than Msif Advantage. It trades about 0.09 of its potential returns per unit of risk. Msif Advantage Port is currently generating about -0.07 per unit of risk. If you would invest  2,408  in Msif International Advantage on December 19, 2024 and sell it today you would earn a total of  146.00  from holding Msif International Advantage or generate 6.06% return on investment over 90 days.

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

Msif International Advantage  vs.  Msif Advantage Port

Msif International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Msif International Advantage are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Msif International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Msif Advantage Port

Risk-Adjusted Performance

Very Weak

Over the last 90 days Msif Advantage Port has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Msif International and Msif Advantage

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

The idea behind Msif International Advantage and Msif Advantage Port 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.