Correlation Between Amundi MSCI and Amundi Index

Can any of the company-specific risk be diversified away by investing in both Amundi MSCI and Amundi Index 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 Amundi MSCI and Amundi Index into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amundi MSCI USA and Amundi Index Solutions, you can compare the effects of market volatilities on Amundi MSCI and Amundi Index 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 Amundi MSCI with a short position of Amundi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amundi MSCI and Amundi Index.

Diversification Opportunities for Amundi MSCI and Amundi Index

-0.47

Correlation Coefficient

Amundi MSCI  Amundi Index

Very good diversification

The 3 months correlation between Amundi and Amundi is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Amundi MSCI USA and Amundi Index Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Index Solutions and Amundi 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 Amundi MSCI USA are associated (or correlated) with Amundi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Index Solutions has no effect on the direction of Amundi MSCI i.e., Amundi MSCI and Amundi Index go up and down completely randomly.

Pair Corralation between Amundi MSCI and Amundi Index

Assuming the 90 days trading horizon Amundi MSCI USA is expected to generate 0.59 times more return on investment than Amundi Index. However, Amundi MSCI USA is 1.7 times less risky than Amundi Index. It trades about 0.17 of its potential returns per unit of risk. Amundi Index Solutions is currently generating about 0.03 per unit of risk. If you would invest  71,503  in Amundi MSCI USA on September 14, 2024 and sell it today you would earn a total of  5,119  from holding Amundi MSCI USA or generate 7.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Amundi MSCI USA  vs.  Amundi Index Solutions

Amundi MSCI USA

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi MSCI USA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Amundi MSCI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Amundi Index Solutions

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi Index Solutions are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Amundi Index is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Amundi MSCI and Amundi Index

The main advantage of trading using opposite Amundi MSCI and Amundi Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amundi MSCI position performs unexpectedly, Amundi Index 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 Amundi Index will offset losses from the drop in Amundi Index's long position.

The idea behind Amundi MSCI USA and Amundi Index Solutions 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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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.