Correlation Between Morgan Stanley and Xtrackers California
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Xtrackers California 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 Xtrackers California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley ETF and Xtrackers California Municipal, you can compare the effects of market volatilities on Morgan Stanley and Xtrackers California 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 Xtrackers California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Xtrackers California.
Diversification Opportunities for Morgan Stanley and Xtrackers California
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Morgan and Xtrackers is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley ETF and Xtrackers California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers California 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 ETF are associated (or correlated) with Xtrackers California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers California has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Xtrackers California go up and down completely randomly.
Pair Corralation between Morgan Stanley and Xtrackers California
Given the investment horizon of 90 days Morgan Stanley ETF is expected to generate 0.54 times more return on investment than Xtrackers California. However, Morgan Stanley ETF is 1.85 times less risky than Xtrackers California. It trades about 0.12 of its potential returns per unit of risk. Xtrackers California Municipal is currently generating about 0.05 per unit of risk. If you would invest 4,877 in Morgan Stanley ETF on September 14, 2024 and sell it today you would earn a total of 130.00 from holding Morgan Stanley ETF or generate 2.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 73.31% |
| Values | Daily Returns |
Morgan Stanley ETF vs. Xtrackers California Municipal
Performance |
| Timeline |
| Morgan Stanley ETF |
| Xtrackers California |
Morgan Stanley and Xtrackers California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Xtrackers California
The main advantage of trading using opposite Morgan Stanley and Xtrackers California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Xtrackers California 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 Xtrackers California will offset losses from the drop in Xtrackers California's long position.| Morgan Stanley vs. Xtrackers California Municipal | Morgan Stanley vs. VCRM | Morgan Stanley vs. IQ MacKay Municipal | Morgan Stanley vs. IQ MacKay Municipal |
| Xtrackers California vs. VCRM | Xtrackers California vs. IQ MacKay Municipal | Xtrackers California vs. IQ MacKay Municipal | Xtrackers California vs. ALPS Intermediate Municipal |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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