Correlation Between First Eagle and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both First Eagle 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 First Eagle and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Eagle Gold and Morgan Stanley European, you can compare the effects of market volatilities on First Eagle 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 First Eagle with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Eagle and Morgan Stanley.
Diversification Opportunities for First Eagle and Morgan Stanley
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Morgan is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Gold 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 First Eagle 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 First Eagle Gold 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 First Eagle i.e., First Eagle and Morgan Stanley go up and down completely randomly.
Pair Corralation between First Eagle and Morgan Stanley
Assuming the 90 days horizon First Eagle Gold is expected to under-perform the Morgan Stanley. In addition to that, First Eagle is 1.68 times more volatile than Morgan Stanley European. It trades about -0.06 of its total potential returns per unit of risk. Morgan Stanley European is currently generating about 0.09 per unit of volatility. If you would invest 2,201 in Morgan Stanley European on September 12, 2024 and sell it today you would earn a total of 123.00 from holding Morgan Stanley European or generate 5.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
First Eagle Gold vs. Morgan Stanley European
Performance |
| Timeline |
| First Eagle Gold |
| Morgan Stanley European |
First Eagle and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Eagle and Morgan Stanley
The main advantage of trading using opposite First Eagle and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Eagle 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.| First Eagle vs. First Eagle Gold | First Eagle vs. First Eagle Gold | First Eagle vs. Franklin Gold Precious | First Eagle vs. First Eagle Global |
| Morgan Stanley vs. Invesco Asia Pacific | Morgan Stanley vs. Invesco European Small | Morgan Stanley vs. Invesco Developing Markets | Morgan Stanley vs. Aquagold International |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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