Correlation Between FT Cboe and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both FT Cboe 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 FT Cboe and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FT Cboe Vest and Morgan Stanley ETF, you can compare the effects of market volatilities on FT Cboe 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 FT Cboe with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Cboe and Morgan Stanley.
Diversification Opportunities for FT Cboe and Morgan Stanley
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KNG and Morgan is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest 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 FT Cboe 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 FT Cboe Vest 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 FT Cboe i.e., FT Cboe and Morgan Stanley go up and down completely randomly.
Pair Corralation between FT Cboe and Morgan Stanley
Considering the 90-day investment horizon FT Cboe Vest is expected to under-perform the Morgan Stanley. But the etf apears to be less risky and, when comparing its historical volatility, FT Cboe Vest is 1.14 times less risky than Morgan Stanley. The etf trades about -0.07 of its potential returns per unit of risk. The Morgan Stanley ETF is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 2,698 in Morgan Stanley ETF on November 28, 2024 and sell it today you would lose (8.00) from holding Morgan Stanley ETF or give up 0.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FT Cboe Vest vs. Morgan Stanley ETF
Performance |
| Timeline |
| FT Cboe Vest |
| Morgan Stanley ETF |
FT Cboe and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT Cboe and Morgan Stanley
The main advantage of trading using opposite FT Cboe and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Cboe 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.| FT Cboe vs. Global X SP | FT Cboe vs. Global X Nasdaq | FT Cboe vs. First Trust BuyWrite | FT Cboe vs. Amplify CWP Enhanced |
| Morgan Stanley vs. Strategy Shares | Morgan Stanley vs. Freedom Day Dividend | Morgan Stanley vs. Franklin Templeton ETF | Morgan Stanley vs. iShares MSCI China |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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