Correlation Between Global X and MSFY

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

By analyzing existing cross correlation between Global X Russell and MSFY, you can compare the effects of market volatilities on Global X and MSFY 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 Global X with a short position of MSFY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and MSFY.

Diversification Opportunities for Global X and MSFY

0.41

Correlation Coefficient

Global X  MSFY

Very weak diversification

The 3 months correlation between Global and MSFY is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Global X Russell and MSFY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSFY and Global X 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 Global X Russell are associated (or correlated) with MSFY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSFY has no effect on the direction of Global X i.e., Global X and MSFY go up and down completely randomly.

Pair Corralation between Global X and MSFY

Given the investment horizon of 90 days Global X Russell is expected to generate 0.56 times more return on investment than MSFY. However, Global X Russell is 1.78 times less risky than MSFY. It trades about 0.18 of its potential returns per unit of risk. MSFY is currently generating about 0.06 per unit of risk. If you would invest  1,574  in Global X Russell on September 13, 2024 and sell it today you would earn a total of  103.00  from holding Global X Russell or generate 6.54% return on investment over 90 days.

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

Global X Russell  vs.  MSFY

Global X Russell

Risk-Adjusted Performance

13 of 100

Good

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

MSFY

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MSFY are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, MSFY is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global X and MSFY

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

The idea behind Global X Russell and MSFY 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.