Correlation Between Nasdaq-100(r) and Msvif Mid

Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Msvif Mid 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 Nasdaq-100(r) and Msvif Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Msvif Mid Cap, you can compare the effects of market volatilities on Nasdaq-100(r) and Msvif Mid 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 Nasdaq-100(r) with a short position of Msvif Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Msvif Mid.

Diversification Opportunities for Nasdaq-100(r) and Msvif Mid

0.66

Correlation Coefficient

Nasdaq-100(r)  Msvif Mid

Poor diversification

The 3 months correlation between Nasdaq-100(r) and Msvif is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Msvif Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Msvif Mid Cap and Nasdaq-100(r) 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 Nasdaq 100 2x Strategy are associated (or correlated) with Msvif Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Msvif Mid Cap has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Msvif Mid go up and down completely randomly.

Pair Corralation between Nasdaq-100(r) and Msvif Mid

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to under-perform the Msvif Mid. In addition to that, Nasdaq-100(r) is 1.65 times more volatile than Msvif Mid Cap. It trades about -0.13 of its total potential returns per unit of risk. Msvif Mid Cap is currently generating about -0.06 per unit of volatility. If you would invest  604.00  in Msvif Mid Cap on October 11, 2024 and sell it today you would lose (17.00) from holding Msvif Mid Cap or give up 2.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Nasdaq 100 2x Strategy  vs.  Msvif Mid Cap

Nasdaq 100 2x

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nasdaq 100 2x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Nasdaq-100(r) is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Msvif Mid Cap

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Msvif Mid Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Msvif Mid showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq-100(r) and Msvif Mid

The main advantage of trading using opposite Nasdaq-100(r) and Msvif Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Msvif Mid 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 Msvif Mid will offset losses from the drop in Msvif Mid's long position.

The idea behind Nasdaq 100 2x Strategy and Msvif Mid Cap 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.