Correlation Between Global Core and Msif International

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

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

Diversification Opportunities for Global Core and Msif International

0.9

Correlation Coefficient

Global Core  Msif International

Almost no diversification

The 3 months correlation between Global and MSIF is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Global E Portfolio and Msif International Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Msif International and Global Core 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 Global E Portfolio are associated (or correlated) with Msif International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Msif International has no effect on the direction of Global Core i.e., Global Core and Msif International go up and down completely randomly.

Pair Corralation between Global Core and Msif International

Assuming the 90 days horizon Global E Portfolio is expected to generate 0.81 times more return on investment than Msif International. However, Global E Portfolio is 1.24 times less risky than Msif International. It trades about 0.1 of its potential returns per unit of risk. Msif International Opportunity is currently generating about 0.08 per unit of risk. If you would invest  1,430  in Global E Portfolio on December 2, 2024 and sell it today you would earn a total of  712.00  from holding Global E Portfolio or generate 49.79% return on investment over 90 days.

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

Global E Portfolio  vs.  Msif International Opportunity

Global E Portfolio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global E Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Global Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Msif International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Msif International Opportunity are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Msif International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global Core and Msif International

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

The idea behind Global E Portfolio and Msif International Opportunity 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.