Correlation Between Emerging Markets and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Emerging Markets 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 Emerging Markets and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Portfolio and Morgan Stanley Multi, you can compare the effects of market volatilities on Emerging Markets 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 Emerging Markets with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Morgan Stanley.
Diversification Opportunities for Emerging Markets and Morgan Stanley
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Emerging and Morgan is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Portfolio 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 Emerging Markets 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 Emerging Markets 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 Emerging Markets i.e., Emerging Markets and Morgan Stanley go up and down completely randomly.
Pair Corralation between Emerging Markets and Morgan Stanley
Assuming the 90 days horizon Emerging Markets is expected to generate 3.29 times less return on investment than Morgan Stanley. But when comparing it to its historical volatility, Emerging Markets Portfolio is 2.07 times less risky than Morgan Stanley. It trades about 0.08 of its potential returns per unit of risk. Morgan Stanley Multi is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 808.00 in Morgan Stanley Multi on October 28, 2024 and sell it today you would earn a total of 733.00 from holding Morgan Stanley Multi or generate 90.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerging Markets Portfolio vs. Morgan Stanley Multi
Performance |
| Timeline |
| Emerging Markets Por |
| Morgan Stanley Multi |
Emerging Markets and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Morgan Stanley
The main advantage of trading using opposite Emerging Markets and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets 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.| Emerging Markets vs. Credit Suisse Multialternative | Emerging Markets vs. Short Duration Inflation | Emerging Markets vs. Fidelity Sai Inflationfocused | Emerging Markets vs. Short Duration Inflation |
| Morgan Stanley vs. Short Duration Inflation | Morgan Stanley vs. Credit Suisse Multialternative | Morgan Stanley vs. Tiaa Cref Inflation Linked Bond | Morgan Stanley vs. Credit Suisse Multialternative |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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