Correlation Between Morgan Stanley and Firsthand Technology
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Firsthand Technology 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 Firsthand Technology 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 Firsthand Technology Opportunities, you can compare the effects of market volatilities on Morgan Stanley and Firsthand Technology 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 Firsthand Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Firsthand Technology.
Diversification Opportunities for Morgan Stanley and Firsthand Technology
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Morgan and FIRSTHAND is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Multi and Firsthand Technology Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firsthand Technology 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 Firsthand Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firsthand Technology has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Firsthand Technology go up and down completely randomly.
Pair Corralation between Morgan Stanley and Firsthand Technology
Assuming the 90 days horizon Morgan Stanley Multi is expected to generate 1.03 times more return on investment than Firsthand Technology. However, Morgan Stanley is 1.03 times more volatile than Firsthand Technology Opportunities. It trades about 0.13 of its potential returns per unit of risk. Firsthand Technology Opportunities is currently generating about -0.03 per unit of risk. 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley Multi vs. Firsthand Technology Opportuni
Performance |
| Timeline |
| Morgan Stanley Multi |
| Firsthand Technology |
Morgan Stanley and Firsthand Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Firsthand Technology
The main advantage of trading using opposite Morgan Stanley and Firsthand Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Firsthand Technology 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 Firsthand Technology will offset losses from the drop in Firsthand Technology's long position.| Morgan Stanley vs. Emerging Markets Equity | Morgan Stanley vs. Global Fixed Income | Morgan Stanley vs. Global Fixed Income | Morgan Stanley vs. Global Fixed Income |
| Firsthand Technology vs. Berkshire Focus | Firsthand Technology vs. Red Oak Technology | Firsthand Technology vs. Jacob Internet Fund | Firsthand Technology vs. Kinetics Internet Fund |
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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