Correlation Between Russell 2000 and Ms Global

Can any of the company-specific risk be diversified away by investing in both Russell 2000 and Ms Global 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 Russell 2000 and Ms Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Russell 2000 15x and Ms Global Fixed, you can compare the effects of market volatilities on Russell 2000 and Ms Global 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 Russell 2000 with a short position of Ms Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Russell 2000 and Ms Global.

Diversification Opportunities for Russell 2000 and Ms Global

-0.51

Correlation Coefficient

Russell 2000  Ms Global

Excellent diversification

The 3 months correlation between Russell and MFIRX is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Russell 2000 15x and Ms Global Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ms Global Fixed and Russell 2000 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 Russell 2000 15x are associated (or correlated) with Ms Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ms Global Fixed has no effect on the direction of Russell 2000 i.e., Russell 2000 and Ms Global go up and down completely randomly.

Pair Corralation between Russell 2000 and Ms Global

Assuming the 90 days horizon Russell 2000 15x is expected to under-perform the Ms Global. In addition to that, Russell 2000 is 11.42 times more volatile than Ms Global Fixed. It trades about -0.11 of its total potential returns per unit of risk. Ms Global Fixed is currently generating about 0.23 per unit of volatility. If you would invest  517.00  in Ms Global Fixed on December 20, 2024 and sell it today you would earn a total of  11.00  from holding Ms Global Fixed or generate 2.13% return on investment over 90 days.

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

Russell 2000 15x  vs.  Ms Global Fixed

Russell 2000 15x

Risk-Adjusted Performance

Very Weak

Over the last 90 days Russell 2000 15x has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Ms Global Fixed

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ms Global Fixed are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ms Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Russell 2000 and Ms Global

The main advantage of trading using opposite Russell 2000 and Ms Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Russell 2000 position performs unexpectedly, Ms Global 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 Ms Global will offset losses from the drop in Ms Global's long position.

The idea behind Russell 2000 15x and Ms Global Fixed 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.