Correlation Between Morgan Stanley and Nuveen Select
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Nuveen Select 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 Nuveen Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley Emerging and Nuveen Select Maturities, you can compare the effects of market volatilities on Morgan Stanley and Nuveen Select 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 Nuveen Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Nuveen Select.
Diversification Opportunities for Morgan Stanley and Nuveen Select
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Morgan and Nuveen is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Emerging and Nuveen Select Maturities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Select Maturities 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 Emerging are associated (or correlated) with Nuveen Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Select Maturities has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Nuveen Select go up and down completely randomly.
Pair Corralation between Morgan Stanley and Nuveen Select
Considering the 90-day investment horizon Morgan Stanley Emerging is expected to under-perform the Nuveen Select. In addition to that, Morgan Stanley is 1.86 times more volatile than Nuveen Select Maturities. It trades about -0.21 of its total potential returns per unit of risk. Nuveen Select Maturities is currently generating about -0.12 per unit of volatility. If you would invest 920.00 in Nuveen Select Maturities on August 30, 2024 and sell it today you would lose (23.00) from holding Nuveen Select Maturities or give up 2.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley Emerging vs. Nuveen Select Maturities
Performance |
| Timeline |
| Morgan Stanley Emerging |
| Nuveen Select Maturities |
Morgan Stanley and Nuveen Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Nuveen Select
The main advantage of trading using opposite Morgan Stanley and Nuveen Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Nuveen Select 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 Nuveen Select will offset losses from the drop in Nuveen Select's long position.| Morgan Stanley vs. MFS Investment Grade | Morgan Stanley vs. Invesco High Income | Morgan Stanley vs. Blackrock Muniholdings Ny | Morgan Stanley vs. Credit Suisse High |
| Nuveen Select vs. Gabelli Global Small | Nuveen Select vs. MFS Investment Grade | Nuveen Select vs. Eaton Vance National | Nuveen Select vs. GAMCO Natural Resources |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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