Correlation Between Morgan Stanley and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Emerging Markets 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 Morgan Stanley and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley Institutional and Emerging Markets Equity, you can compare the effects of market volatilities on Morgan Stanley and Emerging Markets 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 Morgan Stanley with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Emerging Markets.
Diversification Opportunities for Morgan Stanley and Emerging Markets
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Morgan and Emerging is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Institutional and Emerging Markets Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Equity and Morgan Stanley 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 Morgan Stanley Institutional are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Equity has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Emerging Markets go up and down completely randomly.
Pair Corralation between Morgan Stanley and Emerging Markets
Assuming the 90 days horizon Morgan Stanley Institutional is expected to generate 1.09 times more return on investment than Emerging Markets. However, Morgan Stanley is 1.09 times more volatile than Emerging Markets Equity. It trades about 0.07 of its potential returns per unit of risk. Emerging Markets Equity is currently generating about 0.03 per unit of risk. If you would invest 1,011 in Morgan Stanley Institutional on August 31, 2024 and sell it today you would earn a total of 257.00 from holding Morgan Stanley Institutional or generate 25.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley Institutional vs. Emerging Markets Equity
Performance |
| Timeline |
| Morgan Stanley Insti |
| Emerging Markets Equity |
Morgan Stanley and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Emerging Markets
The main advantage of trading using opposite Morgan Stanley and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Morgan Stanley vs. Advent Claymore Convertible | Morgan Stanley vs. Calamos Dynamic Convertible | Morgan Stanley vs. Rationalpier 88 Convertible | Morgan Stanley vs. Lord Abbett Convertible |
| Emerging Markets vs. Pear Tree Polaris | Emerging Markets vs. Artisan High Income | Emerging Markets vs. HUMANA INC | Emerging Markets 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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