Correlation Between Morgan Stanley and Templeton Foreign
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Templeton Foreign 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 Templeton Foreign 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 Templeton Foreign Fund, you can compare the effects of market volatilities on Morgan Stanley and Templeton Foreign 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 Templeton Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Templeton Foreign.
Diversification Opportunities for Morgan Stanley and Templeton Foreign
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Morgan and Templeton is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Government and Templeton Foreign Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Foreign 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 Templeton Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Foreign has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Templeton Foreign go up and down completely randomly.
Pair Corralation between Morgan Stanley and Templeton Foreign
Assuming the 90 days horizon Morgan Stanley is expected to generate 2.44 times less return on investment than Templeton Foreign. But when comparing it to its historical volatility, Morgan Stanley Government is 1.28 times less risky than Templeton Foreign. It trades about 0.03 of its potential returns per unit of risk. Templeton Foreign Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 649.00 in Templeton Foreign Fund on August 28, 2024 and sell it today you would earn a total of 154.00 from holding Templeton Foreign Fund or generate 23.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Morgan Stanley Government vs. Templeton Foreign Fund
Performance |
| Timeline |
| Morgan Stanley Government |
| Templeton Foreign |
Morgan Stanley and Templeton Foreign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Templeton Foreign
The main advantage of trading using opposite Morgan Stanley and Templeton Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Templeton Foreign 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 Templeton Foreign will offset losses from the drop in Templeton Foreign'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 |
| Templeton Foreign vs. Fidelity Advisor Health | Templeton Foreign vs. Baron Health Care | Templeton Foreign vs. Alphacentric Lifesci Healthcare | Templeton Foreign vs. Eventide Healthcare Life |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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