Correlation Between Elfun Trusts and MORGAN

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Can any of the company-specific risk be diversified away by investing in both Elfun Trusts and MORGAN 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 Elfun Trusts and MORGAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elfun Trusts Elfun and MORGAN STANLEY 3125, you can compare the effects of market volatilities on Elfun Trusts and MORGAN 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 Elfun Trusts with a short position of MORGAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elfun Trusts and MORGAN.

Diversification Opportunities for Elfun Trusts and MORGAN

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Elfun and MORGAN is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Trusts Elfun and MORGAN STANLEY 3125 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MORGAN STANLEY 3125 and Elfun Trusts 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 Elfun Trusts Elfun are associated (or correlated) with MORGAN. 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 3125 has no effect on the direction of Elfun Trusts i.e., Elfun Trusts and MORGAN go up and down completely randomly.

Pair Corralation between Elfun Trusts and MORGAN

Assuming the 90 days horizon Elfun Trusts Elfun is expected to under-perform the MORGAN. In addition to that, Elfun Trusts is 4.64 times more volatile than MORGAN STANLEY 3125. It trades about -0.18 of its total potential returns per unit of risk. MORGAN STANLEY 3125 is currently generating about -0.19 per unit of volatility. If you would invest  9,750  in MORGAN STANLEY 3125 on October 22, 2024 and sell it today you would lose (182.00) from holding MORGAN STANLEY 3125 or give up 1.87% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy94.74%
ValuesDaily Returns

Elfun Trusts Elfun  vs.  MORGAN STANLEY 3125

 Performance 
       Timeline  
Elfun Trusts Elfun 

Risk-Adjusted Performance

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Over the last 90 days Elfun Trusts Elfun has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.
MORGAN STANLEY 3125 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days MORGAN STANLEY 3125 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MORGAN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Elfun Trusts and MORGAN Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Elfun Trusts and MORGAN

The main advantage of trading using opposite Elfun Trusts and MORGAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elfun Trusts position performs unexpectedly, MORGAN 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 will offset losses from the drop in MORGAN's long position.
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The idea behind Elfun Trusts Elfun and MORGAN STANLEY 3125 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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