Correlation Between Regional Bank and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Regional Bank 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 Regional Bank and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Bank Fund and Morgan Stanley Emerging, you can compare the effects of market volatilities on Regional Bank 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 Regional Bank with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Bank and Morgan Stanley.
Diversification Opportunities for Regional Bank and Morgan Stanley
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between REGIONAL and Morgan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Regional Bank Fund 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 Regional Bank 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 Regional Bank Fund 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 Regional Bank i.e., Regional Bank and Morgan Stanley go up and down completely randomly.
Pair Corralation between Regional Bank and Morgan Stanley
Assuming the 90 days horizon Regional Bank Fund is expected to generate 3.72 times more return on investment than Morgan Stanley. However, Regional Bank is 3.72 times more volatile than Morgan Stanley Emerging. It trades about 0.02 of its potential returns per unit of risk. Morgan Stanley Emerging is currently generating about 0.0 per unit of risk. If you would invest 2,690 in Regional Bank Fund on November 1, 2024 and sell it today you would earn a total of 276.00 from holding Regional Bank Fund or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Bank Fund vs. Morgan Stanley Emerging
Performance |
| Timeline |
| Regional Bank |
| Morgan Stanley Emerging |
Regional Bank and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Bank and Morgan Stanley
The main advantage of trading using opposite Regional Bank and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Bank 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.| Regional Bank vs. Morgan Stanley Emerging | Regional Bank vs. Angel Oak Multi Strategy | Regional Bank vs. Jpmorgan Emerging Markets | Regional Bank vs. Dws Emerging Markets |
| Morgan Stanley vs. Great West Emerging Markets | Morgan Stanley vs. Eagle Mlp Strategy | Morgan Stanley vs. Balanced Strategy Fund | Morgan Stanley vs. Jpmorgan Emerging Markets |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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