Correlation Between Usaa MSCI and FTSE EM

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Can any of the company-specific risk be diversified away by investing in both Usaa MSCI and FTSE EM 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 Usaa MSCI and FTSE EM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Usaa MSCI EM and FTSE EM ETF, you can compare the effects of market volatilities on Usaa MSCI and FTSE EM 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 Usaa MSCI with a short position of FTSE EM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Usaa MSCI and FTSE EM.

Diversification Opportunities for Usaa MSCI and FTSE EM

0.98
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Usaa MSCI and FTSE EM is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Usaa MSCI EM and FTSE EM ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTSE EM ETF and Usaa 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 Usaa MSCI EM are associated (or correlated) with FTSE EM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTSE EM ETF has no effect on the direction of Usaa MSCI i.e., Usaa MSCI and FTSE EM go up and down completely randomly.

Pair Corralation between Usaa MSCI and FTSE EM

Given the investment horizon of 90 days Usaa MSCI EM is expected to under-perform the FTSE EM. But the etf apears to be less risky and, when comparing its historical volatility, Usaa MSCI EM is 1.08 times less risky than FTSE EM. The etf trades about -0.2 of its potential returns per unit of risk. The FTSE EM ETF is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  4,147  in FTSE EM ETF on July 8, 2022 and sell it today you would lose (358.00)  from holding FTSE EM ETF or give up 8.63% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Usaa MSCI EM  vs.  FTSE EM ETF

 Performance (%) 
       Timeline  
Usaa MSCI EM 
Usaa MSCI Performance
0 of 100
Over the last 90 days Usaa MSCI EM has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Etf's basic indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the ETF firm stakeholders.

Usaa MSCI Price Channel

FTSE EM ETF 
FTSE EM Performance
0 of 100
Over the last 90 days FTSE EM ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Etf's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

FTSE EM Price Channel

Usaa MSCI and FTSE EM Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Usaa MSCI and FTSE EM

The main advantage of trading using opposite Usaa MSCI and FTSE EM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Usaa MSCI position performs unexpectedly, FTSE EM 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 FTSE EM will offset losses from the drop in FTSE EM's long position.
Usaa MSCI vs. Walmart
The idea behind Usaa MSCI EM and FTSE EM ETF 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.
FTSE EM vs. Walmart
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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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