Correlation Between Global Opportunity and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Global Opportunity 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 Global Opportunity and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Opportunity Portfolio and Morgan Stanley Multi, you can compare the effects of market volatilities on Global Opportunity 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 Global Opportunity with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Opportunity and Morgan Stanley.
Diversification Opportunities for Global Opportunity and Morgan Stanley
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Morgan is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Global Opportunity 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 Global Opportunity 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 Global Opportunity 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 Global Opportunity i.e., Global Opportunity and Morgan Stanley go up and down completely randomly.
Pair Corralation between Global Opportunity and Morgan Stanley
Assuming the 90 days horizon Global Opportunity is expected to generate 1.15 times less return on investment than Morgan Stanley. But when comparing it to its historical volatility, Global Opportunity Portfolio is 1.55 times less risky than Morgan Stanley. It trades about 0.06 of its potential returns per unit of risk. Morgan Stanley Multi is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,201 in Morgan Stanley Multi on August 24, 2024 and sell it today you would earn a total of 1,570 from holding Morgan Stanley Multi or generate 49.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Opportunity Portfolio vs. Morgan Stanley Multi
Performance |
| Timeline |
| Global Opportunity |
| Morgan Stanley Multi |
Global Opportunity and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Opportunity and Morgan Stanley
The main advantage of trading using opposite Global Opportunity and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Opportunity 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.| Global Opportunity vs. Emerging Markets Fund | Global Opportunity vs. International Growth Fund | Global Opportunity vs. Heritage Fund Investor | Global Opportunity vs. Select Fund Investor |
| Morgan Stanley vs. HUMANA INC | Morgan Stanley vs. Aquagold International | Morgan Stanley vs. Barloworld Ltd ADR | Morgan Stanley vs. Morningstar Unconstrained Allocation |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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