Correlation Between Msif International and Frontier Markets
Can any of the company-specific risk be diversified away by investing in both Msif International and Frontier Markets 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 Msif International and Frontier Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Msif International Opportunity and Frontier Markets Portfolio, you can compare the effects of market volatilities on Msif International and Frontier Markets 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 Msif International with a short position of Frontier Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Msif International and Frontier Markets.
Diversification Opportunities for Msif International and Frontier Markets
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Msif and Frontier is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Msif International Opportunity and Frontier Markets Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Markets Por and Msif International 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 Msif International Opportunity are associated (or correlated) with Frontier Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Markets Por has no effect on the direction of Msif International i.e., Msif International and Frontier Markets go up and down completely randomly.
Pair Corralation between Msif International and Frontier Markets
Assuming the 90 days horizon Msif International Opportunity is expected to under-perform the Frontier Markets. But the mutual fund apears to be less risky and, when comparing its historical volatility, Msif International Opportunity is 1.0 times less risky than Frontier Markets. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Frontier Markets Portfolio is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest 1,653 in Frontier Markets Portfolio on October 9, 2024 and sell it today you would lose (59.00) from holding Frontier Markets Portfolio or give up 3.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Msif International Opportunity vs. Frontier Markets Portfolio
Performance |
| Timeline |
| Msif International |
| Frontier Markets Por |
Msif International and Frontier Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Msif International and Frontier Markets
The main advantage of trading using opposite Msif International and Frontier Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Msif International position performs unexpectedly, Frontier Markets 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 Frontier Markets will offset losses from the drop in Frontier Markets' long position.| Msif International vs. Global Opportunity Portfolio | Msif International vs. International Advantage Portfolio | Msif International vs. Morgan Stanley Multi | Msif International vs. Growth Portfolio Class |
| Frontier Markets vs. Frontier Markets Portfolio | Frontier Markets vs. Harding Loevner Frontier | Frontier Markets vs. Wasatch Frontier Emerging | Frontier Markets vs. International Opportunity Portfolio |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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