Correlation Between MSCI and Dun Bradstreet

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

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

Diversification Opportunities for MSCI and Dun Bradstreet

-0.15

Correlation Coefficient

MSCI  Dun Bradstreet

Good diversification

The 3 months correlation between MSCI and Dun is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding MSCI Inc and Dun Bradstreet Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dun Bradstreet Holdings and 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 MSCI Inc are associated (or correlated) with Dun Bradstreet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dun Bradstreet Holdings has no effect on the direction of MSCI i.e., MSCI and Dun Bradstreet go up and down completely randomly.

Pair Corralation between MSCI and Dun Bradstreet

Given the investment horizon of 90 days MSCI Inc is expected to under-perform the Dun Bradstreet. But the stock apears to be less risky and, when comparing its historical volatility, MSCI Inc is 1.81 times less risky than Dun Bradstreet. The stock trades about -0.02 of its potential returns per unit of risk. The Dun Bradstreet Holdings is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,136  in Dun Bradstreet Holdings on August 15, 2024 and sell it today you would earn a total of  113.00  from holding Dun Bradstreet Holdings or generate 9.95% return on investment over 90 days.

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

MSCI Inc  vs.  Dun Bradstreet Holdings

MSCI Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MSCI Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating fundamental indicators, MSCI may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Dun Bradstreet Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dun Bradstreet Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Dun Bradstreet may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with MSCI and Dun Bradstreet

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

The idea behind MSCI Inc and Dun Bradstreet Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.