Correlation Between New World and Msif Emerging
Can any of the company-specific risk be diversified away by investing in both New World and Msif 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 New World and Msif Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New World Fund and Msif Emerging Markets, you can compare the effects of market volatilities on New World and Msif 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 New World with a short position of Msif Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of New World and Msif Emerging.
Diversification Opportunities for New World and Msif Emerging
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between New and Msif is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding New World Fund and Msif Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Msif Emerging Markets and New World 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 New World Fund are associated (or correlated) with Msif Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Msif Emerging Markets has no effect on the direction of New World i.e., New World and Msif Emerging go up and down completely randomly.
Pair Corralation between New World and Msif Emerging
Assuming the 90 days horizon New World is expected to generate 1.55 times less return on investment than Msif Emerging. But when comparing it to its historical volatility, New World Fund is 1.11 times less risky than Msif Emerging. It trades about 0.12 of its potential returns per unit of risk. Msif Emerging Markets is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,991 in Msif Emerging Markets on February 10, 2024 and sell it today you would earn a total of 155.00 from holding Msif Emerging Markets or generate 7.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
New World Fund vs. Msif Emerging Markets
Performance |
Timeline |
New World Fund |
Msif Emerging Markets |
New World and Msif Emerging Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with New World and Msif Emerging
The main advantage of trading using opposite New World and Msif Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New World position performs unexpectedly, Msif 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 Msif Emerging will offset losses from the drop in Msif Emerging's long position.New World vs. Vanguard Emerging Markets | New World vs. Vanguard Emerging Markets | New World vs. Vanguard Emerging Markets | New World vs. Vanguard Emerging Markets |
Msif Emerging vs. Vanguard Emerging Markets | Msif Emerging vs. American Funds New | Msif Emerging vs. American Funds New | Msif Emerging vs. New World Fund |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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