Correlation Between Morgan Stanley and American Funds
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and American Funds 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 American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley Global and American Funds American, you can compare the effects of market volatilities on Morgan Stanley and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and American Funds.
Diversification Opportunities for Morgan Stanley and American Funds
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Morgan and American is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Global and American Funds American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds American 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 Global are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds American has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and American Funds go up and down completely randomly.
Pair Corralation between Morgan Stanley and American Funds
Assuming the 90 days horizon Morgan Stanley Global is expected to under-perform the American Funds. In addition to that, Morgan Stanley is 2.42 times more volatile than American Funds American. It trades about -0.25 of its total potential returns per unit of risk. American Funds American is currently generating about -0.22 per unit of volatility. If you would invest 3,702 in American Funds American on October 10, 2024 and sell it today you would lose (226.00) from holding American Funds American or give up 6.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Morgan Stanley Global vs. American Funds American
Performance |
| Timeline |
| Morgan Stanley Global |
| American Funds American |
Morgan Stanley and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and American Funds
The main advantage of trading using opposite Morgan Stanley and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Morgan Stanley vs. Blackrock Large Cap | Morgan Stanley vs. Qs Large Cap | Morgan Stanley vs. Avantis Large Cap | Morgan Stanley vs. Calvert Large Cap |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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