Correlation Between Multi Units and SPDR MSCI

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

By analyzing existing cross correlation between Multi Units Luxembourg and SPDR MSCI World, you can compare the effects of market volatilities on Multi Units and SPDR 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 Multi Units with a short position of SPDR MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Units and SPDR MSCI.

Diversification Opportunities for Multi Units and SPDR MSCI

-0.75

Correlation Coefficient

Multi Units  SPDR MSCI

Pay attention - limited upside

The 3 months correlation between Multi and SPDR is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Multi Units Luxembourg and SPDR MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI World and Multi Units 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 Multi Units Luxembourg are associated (or correlated) with SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI World has no effect on the direction of Multi Units i.e., Multi Units and SPDR MSCI go up and down completely randomly.

Pair Corralation between Multi Units and SPDR MSCI

Assuming the 90 days trading horizon Multi Units Luxembourg is expected to under-perform the SPDR MSCI. In addition to that, Multi Units is 3.25 times more volatile than SPDR MSCI World. It trades about -0.04 of its total potential returns per unit of risk. SPDR MSCI World is currently generating about 0.38 per unit of volatility. If you would invest  6,654  in SPDR MSCI World on October 27, 2024 and sell it today you would earn a total of  330.00  from holding SPDR MSCI World or generate 4.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Multi Units Luxembourg  vs.  SPDR MSCI World

Multi Units Luxembourg

Risk-Adjusted Performance

0 of 100

Very Weak

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

SPDR MSCI World

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR MSCI World are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SPDR 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 Multi Units and SPDR MSCI

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

The idea behind Multi Units Luxembourg and SPDR MSCI World 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.

Check out your portfolio center.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.