Correlation Between Msif Small and Emerging Markets

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

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

Diversification Opportunities for Msif Small and Emerging Markets

-0.91

Correlation Coefficient

Msif Small  Emerging Markets

Pay attention - limited upside

The 3 months correlation between Msif and Emerging is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Msif Small Pany and Emerging Markets Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Equity and Msif Small 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 Msif Small Pany are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Equity has no effect on the direction of Msif Small i.e., Msif Small and Emerging Markets go up and down completely randomly.

Pair Corralation between Msif Small and Emerging Markets

Assuming the 90 days horizon Msif Small Pany is expected to generate 2.31 times more return on investment than Emerging Markets. However, Msif Small is 2.31 times more volatile than Emerging Markets Equity. It trades about 0.1 of its potential returns per unit of risk. Emerging Markets Equity is currently generating about 0.04 per unit of risk. If you would invest  574.00  in Msif Small Pany on October 1, 2024 and sell it today you would earn a total of  418.00  from holding Msif Small Pany or generate 72.82% return on investment over 90 days.

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

Msif Small Pany  vs.  Emerging Markets Equity

Msif Small Pany

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Msif Small Pany are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Msif Small showed solid returns over the last few months and may actually be approaching a breakup point.

Emerging Markets Equity

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Msif Small Pany and Emerging Markets Equity 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.