Correlation Between Morgan Stanley and American Beacon
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and American 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 American 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 American Beacon Ark, you can compare the effects of market volatilities on Morgan Stanley and American 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and American Beacon.
Diversification Opportunities for Morgan Stanley and American Beacon
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Morgan and American is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Multi and American Beacon Ark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Ark has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and American Beacon go up and down completely randomly.
Pair Corralation between Morgan Stanley and American Beacon
Assuming the 90 days horizon Morgan Stanley Multi is expected to generate 0.71 times more return on investment than American Beacon. However, Morgan Stanley Multi is 1.42 times less risky than American Beacon. It trades about 0.39 of its potential returns per unit of risk. American Beacon Ark is currently generating about 0.18 per unit of risk. If you would invest 3,013 in Morgan Stanley Multi on August 26, 2024 and sell it today you would earn a total of 982.00 from holding Morgan Stanley Multi or generate 32.59% 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. American Beacon Ark
Performance |
| Timeline |
| Morgan Stanley Multi |
| American Beacon Ark |
Morgan Stanley and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and American Beacon
The main advantage of trading using opposite Morgan Stanley and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, American 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 American Beacon will offset losses from the drop in American 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 |
| American Beacon vs. Ridgeworth Innovative Growth | American Beacon vs. Mid Cap Growth | American Beacon vs. Small Pany Growth | American 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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