Correlation Between DFS Furniture and MSCI
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and MSCI 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 DFS Furniture and MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and MSCI Inc, you can compare the effects of market volatilities on DFS Furniture and MSCI 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 DFS Furniture with a short position of MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and MSCI.
Diversification Opportunities for DFS Furniture and MSCI
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DFS and MSCI is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and MSCI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSCI Inc and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSCI Inc has no effect on the direction of DFS Furniture i.e., DFS Furniture and MSCI go up and down completely randomly.
Pair Corralation between DFS Furniture and MSCI
Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 1.41 times more return on investment than MSCI. However, DFS Furniture is 1.41 times more volatile than MSCI Inc. It trades about 0.28 of its potential returns per unit of risk. MSCI Inc is currently generating about 0.24 per unit of risk. If you would invest 151.00 in DFS Furniture PLC on September 13, 2024 and sell it today you would earn a total of 15.00 from holding DFS Furniture PLC or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
DFS Furniture PLC vs. MSCI Inc
Performance |
| Timeline |
| DFS Furniture PLC |
| MSCI Inc |
DFS Furniture and MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and MSCI
The main advantage of trading using opposite DFS Furniture and MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, MSCI 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 MSCI will offset losses from the drop in MSCI's long position.| DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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