Correlation Between International Equity and Msif Global
Can any of the company-specific risk be diversified away by investing in both International Equity and Msif Global 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 International Equity and Msif Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Equity Fund and Msif Global Opportunity, you can compare the effects of market volatilities on International Equity and Msif Global 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 International Equity with a short position of Msif Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Equity and Msif Global.
Diversification Opportunities for International Equity and Msif Global
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Msif is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding International Equity Fund and Msif Global Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Msif Global Opportunity and International Equity 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 International Equity Fund are associated (or correlated) with Msif Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Msif Global Opportunity has no effect on the direction of International Equity i.e., International Equity and Msif Global go up and down completely randomly.
Pair Corralation between International Equity and Msif Global
Assuming the 90 days horizon International Equity is expected to generate 8.42 times less return on investment than Msif Global. But when comparing it to its historical volatility, International Equity Fund is 1.22 times less risky than Msif Global. It trades about 0.01 of its potential returns per unit of risk. Msif Global Opportunity is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,325 in Msif Global Opportunity on August 25, 2024 and sell it today you would earn a total of 574.00 from holding Msif Global Opportunity or generate 17.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Equity Fund vs. Msif Global Opportunity
Performance |
| Timeline |
| International Equity |
| Msif Global Opportunity |
International Equity and Msif Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Equity and Msif Global
The main advantage of trading using opposite International Equity and Msif Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Equity position performs unexpectedly, Msif Global 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 Global will offset losses from the drop in Msif Global's long position.The idea behind International Equity Fund and Msif Global Opportunity 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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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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