Correlation Between Baron Global and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Baron Global and Morgan Stanley 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 Baron Global and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Global Advantage and Morgan Stanley Multi, you can compare the effects of market volatilities on Baron Global and Morgan Stanley 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 Baron Global with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Global and Morgan Stanley.
Diversification Opportunities for Baron Global and Morgan Stanley
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BARON and Morgan is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Baron Global Advantage and Morgan Stanley Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Multi and Baron Global 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 Baron Global Advantage are associated (or correlated) with Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley Multi has no effect on the direction of Baron Global i.e., Baron Global and Morgan Stanley go up and down completely randomly.
Pair Corralation between Baron Global and Morgan Stanley
Assuming the 90 days horizon Baron Global is expected to generate 1.7 times less return on investment than Morgan Stanley. But when comparing it to its historical volatility, Baron Global Advantage is 1.28 times less risky than Morgan Stanley. It trades about 0.1 of its potential returns per unit of risk. Morgan Stanley Multi is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,440 in Morgan Stanley Multi on September 2, 2024 and sell it today you would earn a total of 1,591 from holding Morgan Stanley Multi or generate 65.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Global Advantage vs. Morgan Stanley Multi
Performance |
| Timeline |
| Baron Global Advantage |
| Morgan Stanley Multi |
Baron Global and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Global and Morgan Stanley
The main advantage of trading using opposite Baron Global and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Global position performs unexpectedly, Morgan Stanley 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 Morgan Stanley will offset losses from the drop in Morgan Stanley's long position.| Baron Global vs. Baron Opportunity Fund | Baron Global vs. Morgan Stanley Multi | Baron Global vs. Baron Focused Growth | Baron Global vs. Mid Cap Growth |
| Morgan Stanley vs. Emerging Markets Equity | Morgan Stanley vs. Global Fixed Income | Morgan Stanley vs. Global Fixed Income | Morgan Stanley vs. Global Fixed Income |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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