Correlation Between MSCI ACWI and 83001WAC8

Can any of the company-specific risk be diversified away by investing in both MSCI ACWI and 83001WAC8 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 ACWI and 83001WAC8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MSCI ACWI exAUCONSUMER and Six Flags Theme, you can compare the effects of market volatilities on MSCI ACWI and 83001WAC8 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 ACWI with a short position of 83001WAC8. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSCI ACWI and 83001WAC8.

Diversification Opportunities for MSCI ACWI and 83001WAC8

0.01

Correlation Coefficient

MSCI ACWI  83001WAC8

Significant diversification

The 3 months correlation between MSCI and 83001WAC8 is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding MSCI ACWI exAUCONSUMER and Six Flags Theme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Six Flags Theme and MSCI ACWI 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 ACWI exAUCONSUMER are associated (or correlated) with 83001WAC8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Six Flags Theme has no effect on the direction of MSCI ACWI i.e., MSCI ACWI and 83001WAC8 go up and down completely randomly.

Pair Corralation between MSCI ACWI and 83001WAC8

Assuming the 90 days horizon MSCI ACWI is expected to generate 88.99 times less return on investment than 83001WAC8. But when comparing it to its historical volatility, MSCI ACWI exAUCONSUMER is 116.09 times less risky than 83001WAC8. It trades about 0.06 of its potential returns per unit of risk. Six Flags Theme is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  10,213  in Six Flags Theme on October 4, 2024 and sell it today you would lose (41.00) from holding Six Flags Theme or give up 0.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	65.45%
Values	Daily Returns

MSCI ACWI exAUCONSUMER  vs.  Six Flags Theme

MSCI ACWI exAUCONSUMER

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MSCI ACWI exAUCONSUMER are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, MSCI ACWI is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Six Flags Theme

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Six Flags Theme are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 83001WAC8 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MSCI ACWI and 83001WAC8

The main advantage of trading using opposite MSCI ACWI and 83001WAC8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSCI ACWI position performs unexpectedly, 83001WAC8 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 83001WAC8 will offset losses from the drop in 83001WAC8's long position.

The idea behind MSCI ACWI exAUCONSUMER and Six Flags Theme 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 Global Correlations module to find global opportunities by holding instruments from different markets.