Correlation Between Msif Emerging and Western Asset

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

By analyzing existing cross correlation between Msif Emerging Markets and Western Asset Short, you can compare the effects of market volatilities on Msif Emerging and Western Asset 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 Emerging with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Msif Emerging and Western Asset.

Diversification Opportunities for Msif Emerging and Western Asset

0.88

Correlation Coefficient

Msif Emerging  Western Asset

Very poor diversification

The 3 months correlation between Msif and Western is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Msif Emerging Markets and Western Asset Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Short and Msif Emerging 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 Emerging Markets are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Short has no effect on the direction of Msif Emerging i.e., Msif Emerging and Western Asset go up and down completely randomly.

Pair Corralation between Msif Emerging and Western Asset

Assuming the 90 days horizon Msif Emerging Markets is expected to generate 9.12 times more return on investment than Western Asset. However, Msif Emerging is 9.12 times more volatile than Western Asset Short. It trades about 0.15 of its potential returns per unit of risk. Western Asset Short is currently generating about 0.39 per unit of risk. If you would invest  2,252  in Msif Emerging Markets on May 4, 2025 and sell it today you would earn a total of  160.00  from holding Msif Emerging Markets or generate 7.1% return on investment over 90 days.

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

Msif Emerging Markets  vs.  Western Asset Short

Msif Emerging Markets

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Msif Emerging Markets are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Msif Emerging may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Western Asset Short

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Short are ranked lower than 30 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Western Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Msif Emerging and Western Asset

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

The idea behind Msif Emerging Markets and Western Asset Short 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.