Correlation Between Swan Hedged and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Swan Hedged 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 Swan Hedged and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swan Hedged Equity and Morgan Stanley ETF, you can compare the effects of market volatilities on Swan Hedged 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 Swan Hedged with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swan Hedged and Morgan Stanley.
Diversification Opportunities for Swan Hedged and Morgan Stanley
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Swan and Morgan is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Swan Hedged Equity and Morgan Stanley ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley ETF and Swan Hedged 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 Swan Hedged Equity 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 ETF has no effect on the direction of Swan Hedged i.e., Swan Hedged and Morgan Stanley go up and down completely randomly.
Pair Corralation between Swan Hedged and Morgan Stanley
Given the investment horizon of 90 days Swan Hedged is expected to generate 1.0 times less return on investment than Morgan Stanley. In addition to that, Swan Hedged is 1.29 times more volatile than Morgan Stanley ETF. It trades about 0.1 of its total potential returns per unit of risk. Morgan Stanley ETF is currently generating about 0.13 per unit of volatility. If you would invest 2,712 in Morgan Stanley ETF on November 28, 2024 and sell it today you would earn a total of 280.00 from holding Morgan Stanley ETF or generate 10.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swan Hedged Equity vs. Morgan Stanley ETF
Performance |
| Timeline |
| Swan Hedged Equity |
| Morgan Stanley ETF |
Swan Hedged and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swan Hedged and Morgan Stanley
The main advantage of trading using opposite Swan Hedged and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swan Hedged 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.| Swan Hedged vs. Amplify BlackSwan Growth | Swan Hedged vs. Invesco SP 500 | Swan Hedged vs. Simplify Exchange Traded | Swan Hedged vs. Simplify Equity PLUS |
| Morgan Stanley vs. FT Vest Equity | Morgan Stanley vs. Northern Lights | Morgan Stanley vs. Dimensional International High | Morgan Stanley vs. First Trust Exchange Traded |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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