Correlation Between Morgan Stanley and Columbia Emerging
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Columbia Emerging 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 Columbia Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley European and Columbia Emerging Markets, you can compare the effects of market volatilities on Morgan Stanley and Columbia Emerging 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 Columbia Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Columbia Emerging.
Diversification Opportunities for Morgan Stanley and Columbia Emerging
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Morgan and Columbia is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley European and Columbia Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Emerging Markets 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 European are associated (or correlated) with Columbia Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Emerging Markets has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Columbia Emerging go up and down completely randomly.
Pair Corralation between Morgan Stanley and Columbia Emerging
Assuming the 90 days horizon Morgan Stanley European is expected to generate 1.08 times more return on investment than Columbia Emerging. However, Morgan Stanley is 1.08 times more volatile than Columbia Emerging Markets. It trades about 0.11 of its potential returns per unit of risk. Columbia Emerging Markets is currently generating about -0.1 per unit of risk. 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 |
Morgan Stanley European vs. Columbia Emerging Markets
Performance |
| Timeline |
| Morgan Stanley European |
| Columbia Emerging Markets |
Morgan Stanley and Columbia Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Columbia Emerging
The main advantage of trading using opposite Morgan Stanley and Columbia Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Columbia Emerging 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 Columbia Emerging will offset losses from the drop in Columbia Emerging's long position.| Morgan Stanley vs. Jpmorgan Intrepid European | Morgan Stanley vs. Morgan Stanley European | Morgan Stanley vs. Morgan Stanley Insti |
| Columbia Emerging vs. Columbia Large Cap | Columbia Emerging vs. Columbia Trarian Core | Columbia Emerging vs. Columbia Dividend Opportunity | Columbia Emerging vs. Columbia Seligman Global |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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