Correlation Between Balanced Fund and Msvif Emerging

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

By analyzing existing cross correlation between Balanced Fund Investor and Msvif Emerging Mkts, you can compare the effects of market volatilities on Balanced Fund and Msvif Emerging 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 Balanced Fund with a short position of Msvif Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Msvif Emerging.

Diversification Opportunities for Balanced Fund and Msvif Emerging

0.59

Correlation Coefficient

Balanced Fund  Msvif Emerging

Very weak diversification

The 3 months correlation between Balanced and Msvif is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor and Msvif Emerging Mkts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Msvif Emerging Mkts and Balanced Fund 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 Balanced Fund Investor are associated (or correlated) with Msvif Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Msvif Emerging Mkts has no effect on the direction of Balanced Fund i.e., Balanced Fund and Msvif Emerging go up and down completely randomly.

Pair Corralation between Balanced Fund and Msvif Emerging

Assuming the 90 days horizon Balanced Fund is expected to generate 1.02 times less return on investment than Msvif Emerging. In addition to that, Balanced Fund is 1.39 times more volatile than Msvif Emerging Mkts. It trades about 0.09 of its total potential returns per unit of risk. Msvif Emerging Mkts is currently generating about 0.13 per unit of volatility. If you would invest  455.00  in Msvif Emerging Mkts on October 22, 2024 and sell it today you would earn a total of  95.00  from holding Msvif Emerging Mkts or generate 20.88% return on investment over 90 days.

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

Balanced Fund Investor  vs.  Msvif Emerging Mkts

Balanced Fund Investor

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Balanced Fund Investor are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Balanced Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Msvif Emerging Mkts

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Msvif Emerging Mkts are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Msvif Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Balanced Fund and Msvif Emerging

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

The idea behind Balanced Fund Investor and Msvif Emerging Mkts 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.