Correlation Between Morgan Stanley and Highland Small-cap
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Highland Small-cap 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 Highland Small-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley Government and Highland Small Cap Equity, you can compare the effects of market volatilities on Morgan Stanley and Highland Small-cap 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 Highland Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Highland Small-cap.
Diversification Opportunities for Morgan Stanley and Highland Small-cap
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Morgan and Highland is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Government and Highland Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Small Cap 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 Government are associated (or correlated) with Highland Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Small Cap has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Highland Small-cap go up and down completely randomly.
Pair Corralation between Morgan Stanley and Highland Small-cap
Assuming the 90 days horizon Morgan Stanley Government is expected to generate 0.16 times more return on investment than Highland Small-cap. However, Morgan Stanley Government is 6.4 times less risky than Highland Small-cap. It trades about 0.12 of its potential returns per unit of risk. Highland Small Cap Equity is currently generating about -0.01 per unit of risk. If you would invest 93.00 in Morgan Stanley Government on August 29, 2024 and sell it today you would earn a total of 7.00 from holding Morgan Stanley Government or generate 7.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.75% |
| Values | Daily Returns |
Morgan Stanley Government vs. Highland Small Cap Equity
Performance |
| Timeline |
| Morgan Stanley Government |
| Highland Small Cap |
Morgan Stanley and Highland Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Highland Small-cap
The main advantage of trading using opposite Morgan Stanley and Highland Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Highland Small-cap 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 Highland Small-cap will offset losses from the drop in Highland Small-cap's long position.| Morgan Stanley vs. Vanguard Total Stock | Morgan Stanley vs. Vanguard 500 Index | Morgan Stanley vs. Vanguard Total Stock | Morgan Stanley vs. Vanguard Total Stock |
| Highland Small-cap vs. Ultra Short Term Fixed | Highland Small-cap vs. Guggenheim Long Short | Highland Small-cap vs. Barings Active Short | Highland Small-cap vs. Touchstone Ultra Short |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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