Correlation Between Morgan Stanley and Amer Beacon
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Amer Beacon 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 Morgan Stanley and Amer Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley Multi and Amer Beacon Ark, you can compare the effects of market volatilities on Morgan Stanley and Amer Beacon 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 Morgan Stanley with a short position of Amer Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Amer Beacon.
Diversification Opportunities for Morgan Stanley and Amer Beacon
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Morgan and Amer is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Multi and Amer Beacon Ark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amer Beacon Ark and Morgan Stanley 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 Morgan Stanley Multi are associated (or correlated) with Amer Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amer Beacon Ark has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Amer Beacon go up and down completely randomly.
Pair Corralation between Morgan Stanley and Amer Beacon
Assuming the 90 days horizon Morgan Stanley Multi is expected to generate 0.97 times more return on investment than Amer Beacon. However, Morgan Stanley Multi is 1.03 times less risky than Amer Beacon. It trades about 0.04 of its potential returns per unit of risk. Amer Beacon Ark is currently generating about 0.04 per unit of risk. If you would invest 2,752 in Morgan Stanley Multi on August 26, 2024 and sell it today you would earn a total of 1,243 from holding Morgan Stanley Multi or generate 45.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley Multi vs. Amer Beacon Ark
Performance |
| Timeline |
| Morgan Stanley Multi |
| Amer Beacon Ark |
Morgan Stanley and Amer Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Amer Beacon
The main advantage of trading using opposite Morgan Stanley and Amer Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Amer Beacon 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 Amer Beacon will offset losses from the drop in Amer Beacon's long position.| Morgan Stanley vs. Ancorathelen Small Mid Cap | Morgan Stanley vs. M3sixty Capital Small | Morgan Stanley vs. Artisan Small Cap | Morgan Stanley vs. Champlain Small |
| Amer Beacon vs. Ridgeworth Innovative Growth | Amer Beacon vs. Mid Cap Growth | Amer Beacon vs. Small Pany Growth | Amer Beacon vs. Morgan Stanley Multi |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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