Correlation Between Columbia Emerging and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Columbia Emerging and Morgan Stanley 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 Columbia Emerging and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Emerging Markets and Morgan Stanley European, you can compare the effects of market volatilities on Columbia Emerging and Morgan Stanley 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 Columbia Emerging with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Emerging and Morgan Stanley.
Diversification Opportunities for Columbia Emerging and Morgan Stanley
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Columbia and Morgan is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Emerging Markets and Morgan Stanley European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley European and Columbia Emerging 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 Columbia Emerging Markets are associated (or correlated) with Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley European has no effect on the direction of Columbia Emerging i.e., Columbia Emerging and Morgan Stanley go up and down completely randomly.
Pair Corralation between Columbia Emerging and Morgan Stanley
Assuming the 90 days horizon Columbia Emerging Markets is expected to under-perform the Morgan Stanley. But the mutual fund apears to be less risky and, when comparing its historical volatility, Columbia Emerging Markets is 1.08 times less risky than Morgan Stanley. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Morgan Stanley European is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,365 in Morgan Stanley European on September 1, 2024 and sell it today you would earn a total of 51.00 from holding Morgan Stanley European or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Emerging Markets vs. Morgan Stanley European
Performance |
| Timeline |
| Columbia Emerging Markets |
| Morgan Stanley European |
Columbia Emerging and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Emerging and Morgan Stanley
The main advantage of trading using opposite Columbia Emerging and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Emerging position performs unexpectedly, Morgan Stanley 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 Morgan Stanley will offset losses from the drop in Morgan Stanley's long position.| Columbia Emerging vs. Columbia Large Cap | Columbia Emerging vs. Columbia Trarian Core | Columbia Emerging vs. Columbia Dividend Opportunity | Columbia Emerging vs. Columbia Seligman Global |
| Morgan Stanley vs. Jpmorgan Intrepid European | Morgan Stanley vs. Morgan Stanley European | Morgan Stanley vs. Morgan Stanley Insti |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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