Correlation Between Ms Global and Ishares Msci

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

By analyzing existing cross correlation between Ms Global Fixed and Ishares Msci Eafe, you can compare the effects of market volatilities on Ms Global and Ishares 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 Ms Global with a short position of Ishares Msci. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ms Global and Ishares Msci.

Diversification Opportunities for Ms Global and Ishares Msci

0.93

Correlation Coefficient

Ms Global  Ishares Msci

Almost no diversification

The 3 months correlation between MFIRX and Ishares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Ms Global Fixed and Ishares Msci Eafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Msci Eafe and Ms Global 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 Ms Global Fixed are associated (or correlated) with Ishares Msci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Msci Eafe has no effect on the direction of Ms Global i.e., Ms Global and Ishares Msci go up and down completely randomly.

Pair Corralation between Ms Global and Ishares Msci

Assuming the 90 days horizon Ms Global is expected to generate 4.99 times less return on investment than Ishares Msci. But when comparing it to its historical volatility, Ms Global Fixed is 5.51 times less risky than Ishares Msci. It trades about 0.2 of its potential returns per unit of risk. Ishares Msci Eafe is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,510  in Ishares Msci Eafe on December 29, 2024 and sell it today you would earn a total of  148.00  from holding Ishares Msci Eafe or generate 9.8% return on investment over 90 days.

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

Ms Global Fixed  vs.  Ishares Msci Eafe

Ms Global Fixed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ms Global Fixed are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ms Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ishares Msci Eafe

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Msci Eafe are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ishares Msci may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ms Global and Ishares Msci

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

The idea behind Ms Global Fixed and Ishares Msci Eafe 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.