Correlation Between MSCI and Marketwise

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

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

Diversification Opportunities for MSCI and Marketwise

-0.36

Correlation Coefficient

MSCI  Marketwise

Very good diversification

The 3 months correlation between MSCI and Marketwise is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding MSCI Inc and Marketwise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marketwise and MSCI 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 MSCI Inc are associated (or correlated) with Marketwise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marketwise has no effect on the direction of MSCI i.e., MSCI and Marketwise go up and down completely randomly.

Pair Corralation between MSCI and Marketwise

Given the investment horizon of 90 days MSCI Inc is expected to under-perform the Marketwise. But the stock apears to be less risky and, when comparing its historical volatility, MSCI Inc is 4.17 times less risky than Marketwise. The stock trades about -0.03 of its potential returns per unit of risk. The Marketwise is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  50.00  in Marketwise on December 2, 2024 and sell it today you would earn a total of  11.00  from holding Marketwise or generate 22.0% return on investment over 90 days.

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

MSCI Inc  vs.  Marketwise

MSCI Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days MSCI Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, MSCI is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Marketwise

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marketwise are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Marketwise showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MSCI and Marketwise

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

The idea behind MSCI Inc and Marketwise 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.