Correlation Between Morgan Stanley and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Ashmore 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 Ashmore 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 Ashmore Emerging Markets, you can compare the effects of market volatilities on Morgan Stanley and Ashmore 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 Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Ashmore Emerging.
Diversification Opportunities for Morgan Stanley and Ashmore Emerging
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Morgan and Ashmore is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley European and Ashmore Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore 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 Ashmore Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Emerging Markets has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Ashmore Emerging go up and down completely randomly.
Pair Corralation between Morgan Stanley and Ashmore Emerging
Assuming the 90 days horizon Morgan Stanley European is expected to generate 8.14 times more return on investment than Ashmore Emerging. However, Morgan Stanley is 8.14 times more volatile than Ashmore Emerging Markets. It trades about 0.08 of its potential returns per unit of risk. Ashmore Emerging Markets is currently generating about 0.18 per unit of risk. If you would invest 1,714 in Morgan Stanley European on September 13, 2024 and sell it today you would earn a total of 798.00 from holding Morgan Stanley European or generate 46.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley European vs. Ashmore Emerging Markets
Performance |
| Timeline |
| Morgan Stanley European |
| Ashmore Emerging Markets |
Morgan Stanley and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Ashmore Emerging
The main advantage of trading using opposite Morgan Stanley and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Ashmore 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 Ashmore Emerging will offset losses from the drop in Ashmore Emerging's long position.| Morgan Stanley vs. Baron Health Care | Morgan Stanley vs. Delaware Healthcare Fund | Morgan Stanley vs. Alger Health Sciences | Morgan Stanley vs. Prudential Health Sciences |
| Ashmore Emerging vs. Ab Government Exchange | Ashmore Emerging vs. Elfun Government Money | Ashmore Emerging vs. Dws Government Money | Ashmore Emerging vs. Edward Jones Money |
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 Stocks Directory module to find actively traded stocks across global markets.
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