Correlation Between Mid Cap and Msif Emerging

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

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

Diversification Opportunities for Mid Cap and Msif Emerging

-0.54

Correlation Coefficient

Mid Cap  Msif Emerging

Excellent diversification

The 3 months correlation between Mid and Msif is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Msif Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Msif Emerging Markets and Mid Cap 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 Mid Cap Growth are associated (or correlated) with Msif Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Msif Emerging Markets has no effect on the direction of Mid Cap i.e., Mid Cap and Msif Emerging go up and down completely randomly.

Pair Corralation between Mid Cap and Msif Emerging

Assuming the 90 days horizon Mid Cap Growth is expected to generate 2.14 times more return on investment than Msif Emerging. However, Mid Cap is 2.14 times more volatile than Msif Emerging Markets. It trades about 0.08 of its potential returns per unit of risk. Msif Emerging Markets is currently generating about 0.02 per unit of risk. If you would invest  1,373  in Mid Cap Growth on October 22, 2024 and sell it today you would earn a total of  964.00  from holding Mid Cap Growth or generate 70.21% return on investment over 90 days.

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

Mid Cap Growth  vs.  Msif Emerging Markets

Mid Cap Growth

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Growth are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Mid Cap showed solid returns over the last few months and may actually be approaching a breakup point.

Msif Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Msif Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential 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 Mid Cap and Msif Emerging

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

The idea behind Mid Cap Growth and Msif Emerging Markets 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.