Correlation Between MSCI ACWI and High-yield Municipal
Can any of the company-specific risk be diversified away by investing in both MSCI ACWI and High-yield Municipal 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 ACWI and High-yield Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSCI ACWI exAUCONSUMER and High Yield Municipal Fund, you can compare the effects of market volatilities on MSCI ACWI and High-yield Municipal 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 ACWI with a short position of High-yield Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSCI ACWI and High-yield Municipal.
Diversification Opportunities for MSCI ACWI and High-yield Municipal
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MSCI and High-yield is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding MSCI ACWI exAUCONSUMER and High Yield Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Municipal and MSCI ACWI 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 ACWI exAUCONSUMER are associated (or correlated) with High-yield Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Municipal has no effect on the direction of MSCI ACWI i.e., MSCI ACWI and High-yield Municipal go up and down completely randomly.
Pair Corralation between MSCI ACWI and High-yield Municipal
Assuming the 90 days horizon MSCI ACWI exAUCONSUMER is expected to generate 0.74 times more return on investment than High-yield Municipal. However, MSCI ACWI exAUCONSUMER is 1.34 times less risky than High-yield Municipal. It trades about 0.28 of its potential returns per unit of risk. High Yield Municipal Fund is currently generating about 0.01 per unit of risk. If you would invest 2,457 in MSCI ACWI exAUCONSUMER on May 31, 2025 and sell it today you would earn a total of 64.00 from holding MSCI ACWI exAUCONSUMER or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MSCI ACWI exAUCONSUMER vs. High Yield Municipal Fund
Performance |
| Timeline |
| MSCI ACWI exAUCONSUMER |
| High Yield Municipal |
MSCI ACWI and High-yield Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSCI ACWI and High-yield Municipal
The main advantage of trading using opposite MSCI ACWI and High-yield Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSCI ACWI position performs unexpectedly, High-yield Municipal 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 High-yield Municipal will offset losses from the drop in High-yield Municipal's long position.| MSCI ACWI vs. Babcock Wilcox Enterprises | MSCI ACWI vs. Babcock Wilcox Enterprises, | MSCI ACWI vs. Harrow Health 8625 | MSCI ACWI vs. Oxford Lane Capital |
| High-yield Municipal vs. High Yield Fund Investor | High-yield Municipal vs. Intermediate Term Tax Free Bond | High-yield Municipal vs. California High Yield Municipal | High-yield Municipal vs. T Rowe Price |
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 the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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