Correlation Between Morgan Stanley and Cognios Market
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Cognios Market 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 Cognios Market 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 Cognios Market Neutral, you can compare the effects of market volatilities on Morgan Stanley and Cognios Market 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 Cognios Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Cognios Market.
Diversification Opportunities for Morgan Stanley and Cognios Market
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Morgan and Cognios is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Institutional and Cognios Market Neutral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognios Market Neutral 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 Cognios Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognios Market Neutral has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Cognios Market go up and down completely randomly.
Pair Corralation between Morgan Stanley and Cognios Market
Assuming the 90 days horizon Morgan Stanley Institutional is expected to generate 2.31 times more return on investment than Cognios Market. However, Morgan Stanley is 2.31 times more volatile than Cognios Market Neutral. It trades about 0.37 of its potential returns per unit of risk. Cognios Market Neutral is currently generating about -0.06 per unit of risk. If you would invest 1,564 in Morgan Stanley Institutional on October 28, 2024 and sell it today you would earn a total of 68.00 from holding Morgan Stanley Institutional or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley Institutional vs. Cognios Market Neutral
Performance |
| Timeline |
| Morgan Stanley Insti |
| Cognios Market Neutral |
Morgan Stanley and Cognios Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Cognios Market
The main advantage of trading using opposite Morgan Stanley and Cognios Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Cognios Market 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 Cognios Market will offset losses from the drop in Cognios Market's long position.| Morgan Stanley vs. Mutual Of America | Morgan Stanley vs. Ultramid Cap Profund Ultramid Cap | Morgan Stanley vs. Victory Rs Partners | Morgan Stanley vs. Small Cap Value |
| Cognios Market vs. Fidelity New Markets | Cognios Market vs. Rbc Emerging Markets | Cognios Market vs. Locorr Market Trend | Cognios Market vs. Calvert Developed Market |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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