Correlation Between Federated Global and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Federated Global 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 Federated Global and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Global Allocation and Morgan Stanley Emerging, you can compare the effects of market volatilities on Federated Global 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 Federated Global with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Global and Morgan Stanley.
Diversification Opportunities for Federated Global and Morgan Stanley
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Morgan is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Federated Global Allocation and Morgan Stanley Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Emerging and Federated Global 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 Federated Global Allocation 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 Emerging has no effect on the direction of Federated Global i.e., Federated Global and Morgan Stanley go up and down completely randomly.
Pair Corralation between Federated Global and Morgan Stanley
Assuming the 90 days horizon Federated Global Allocation is expected to generate 2.21 times more return on investment than Morgan Stanley. However, Federated Global is 2.21 times more volatile than Morgan Stanley Emerging. It trades about 0.2 of its potential returns per unit of risk. Morgan Stanley Emerging is currently generating about 0.38 per unit of risk. If you would invest 1,951 in Federated Global Allocation on November 4, 2024 and sell it today you would earn a total of 41.00 from holding Federated Global Allocation or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Global Allocation vs. Morgan Stanley Emerging
Performance |
| Timeline |
| Federated Global All |
| Morgan Stanley Emerging |
Federated Global and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Global and Morgan Stanley
The main advantage of trading using opposite Federated Global and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Global 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.| Federated Global vs. Federated Max Cap Index | Federated Global vs. Federated Kaufmann Fund | Federated Global vs. Federated Strategic Income | Federated Global vs. Federated Bond Fund |
| Morgan Stanley vs. Transamerica Large Cap | Morgan Stanley vs. Tax Managed Large Cap | Morgan Stanley vs. Calvert Large Cap | Morgan Stanley vs. Vest Large Cap |
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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