Correlation Between MSCI and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both MSCI and Harmony Gold 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 and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSCI Inc and Harmony Gold Mining, you can compare the effects of market volatilities on MSCI and Harmony Gold 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 with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSCI and Harmony Gold.
Diversification Opportunities for MSCI and Harmony Gold
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MSCI and Harmony is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding MSCI Inc and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining and MSCI 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 Inc are associated (or correlated) with Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of MSCI i.e., MSCI and Harmony Gold go up and down completely randomly.
Pair Corralation between MSCI and Harmony Gold
Assuming the 90 days trading horizon MSCI Inc is expected to generate 0.53 times more return on investment than Harmony Gold. However, MSCI Inc is 1.9 times less risky than Harmony Gold. It trades about 0.22 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.17 per unit of risk. If you would invest 52,534 in MSCI Inc on September 1, 2024 and sell it today you would earn a total of 4,646 from holding MSCI Inc or generate 8.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
MSCI Inc vs. Harmony Gold Mining
Performance |
| Timeline |
| MSCI Inc |
| Harmony Gold Mining |
MSCI and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSCI and Harmony Gold
The main advantage of trading using opposite MSCI and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSCI position performs unexpectedly, Harmony Gold 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.| MSCI vs. Harmony Gold Mining | MSCI vs. STORE ELECTRONIC | MSCI vs. LPKF Laser Electronics | MSCI vs. China Resources Beer |
| Harmony Gold vs. ZIJIN MINH UNSPADR20 | Harmony Gold vs. Superior Plus Corp | Harmony Gold vs. NMI Holdings | Harmony Gold vs. Origin Agritech |
Check out your portfolio center.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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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