Correlation Between International Advantage and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both International Advantage 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 International Advantage and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Advantage Portfolio and Morgan Stanley Multi, you can compare the effects of market volatilities on International Advantage 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 International Advantage with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Advantage and Morgan Stanley.
Diversification Opportunities for International Advantage and Morgan Stanley
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between International and Morgan is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding International Advantage Portfo and Morgan Stanley Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Multi and International Advantage 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 International Advantage Portfolio 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 Multi has no effect on the direction of International Advantage i.e., International Advantage and Morgan Stanley go up and down completely randomly.
Pair Corralation between International Advantage and Morgan Stanley
Assuming the 90 days horizon International Advantage is expected to generate 6.24 times less return on investment than Morgan Stanley. But when comparing it to its historical volatility, International Advantage Portfolio is 1.65 times less risky than Morgan Stanley. It trades about 0.04 of its potential returns per unit of risk. Morgan Stanley Multi is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,067 in Morgan Stanley Multi on August 28, 2024 and sell it today you would earn a total of 1,911 from holding Morgan Stanley Multi or generate 62.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Advantage Portfo vs. Morgan Stanley Multi
Performance |
| Timeline |
| International Advantage |
| Morgan Stanley Multi |
International Advantage and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Advantage and Morgan Stanley
The main advantage of trading using opposite International Advantage and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Advantage 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.The idea behind International Advantage Portfolio and Morgan Stanley Multi pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Morgan Stanley vs. Growth Portfolio Class | Morgan Stanley vs. Global Opportunity Portfolio | Morgan Stanley vs. Small Pany Growth | Morgan Stanley vs. Mid Cap Growth |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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