Correlation Between Emerging Markets and Msif Core

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

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

Diversification Opportunities for Emerging Markets and Msif Core

-0.61

Correlation Coefficient

Emerging Markets  Msif Core

Excellent diversification

The 3 months correlation between Emerging and Msif is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Equity and Msif Core Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Msif Core Portfolio and Emerging Markets 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 Emerging Markets Equity are associated (or correlated) with Msif Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Msif Core Portfolio has no effect on the direction of Emerging Markets i.e., Emerging Markets and Msif Core go up and down completely randomly.

Pair Corralation between Emerging Markets and Msif Core

Assuming the 90 days horizon Emerging Markets Equity is expected to under-perform the Msif Core. But the mutual fund apears to be less risky and, when comparing its historical volatility, Emerging Markets Equity is 1.15 times less risky than Msif Core. The mutual fund trades about -0.25 of its potential returns per unit of risk. The Msif Core Portfolio is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,752  in Msif Core Portfolio on October 6, 2024 and sell it today you would earn a total of  45.00  from holding Msif Core Portfolio or generate 1.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.62%
Values	Daily Returns

Emerging Markets Equity  vs.  Msif Core Portfolio

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.

Msif Core Portfolio

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Msif Core Portfolio are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Msif Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Emerging Markets and Msif Core

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

The idea behind Emerging Markets Equity and Msif Core Portfolio 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.